WHAT A SAVE
Boost for Brits with extra £5,000 for savers thanks to new ‘British ISA’ announced in Spring Budget 2024
Hunt called it good news for savers
A NEW 'British ISA' has been announced in today's Spring Budget in a bid to allow Brits to invest more cash.
The Chancellor said he intends to reform the ISA system and give investors a £5,000 extra tax-free allowance to encourage more people to invest in UK assets.
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Jeremy Hunt called it good news for savers who can benefit from the growth of British businesses.
He said: "After a consultation on its implementation, I will introduce a brand new British ISA which will allow an additional £5,000 annual investment for investments in UK equity with all the tax advantages of other ISAs.
"This will be on top of the existing ISA allowances and ensure that British savers can benefit from the growth of the most promising UK businesses as well as supporting them with the capital to help them expand."
There are currently four types of Individual Savings Accounts (ISA): Cash ISA, stocks and shares ISA, innovative finance ISA and Lifetime ISA.
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Spring Budget at a glance
- Fuel duty will be frozen and the 5p cut extended for a year
- Alcohol duty will be frozen until February next year
- National insurance was cut by an additional 2p
- An extension of the Household Support Fund for the fifth time
- Households on Universal Credit will get an extra year to repay emergency loans from the Government
- A new tax on vapes, which will cause prices to rise
- A one-off new tax on fags to ensure they are more expensive than the electronic alternative
- The high income child benefit charge was raised from £50,000 to £60,000
Every tax year you can put money into one of each kind of ISA - the tax year runs from April 6 to April 5.
You can save up to £20,000 in one type of account or split the allowance across some or all of the other types.
For example you could save £15,000 in a cash ISA, £2,000 in a stocks and shares ISA and £3,000 in an innovative finance ISA in one tax year.
You can only pay £4,000 into your Lifetime ISA in a tax year.
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Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group, said: "ISAs represent a significant pool of savings and the Chancellor is hoping he can encourage people to buy British.
"The big question is whether today's incentive will be enough to encourage people to invest at home."
Jeremy Hunt delivers the 2024 budget statement
Brian Byrnes, Head of Personal Finance at Moneybox, said: "While the British ISA may stand to benefit British businesses in time, and we welcome any reform intended to encourage investing, it is unlikely the British ISA will deliver real benefit to the vast majority of retail investors.
"The fact is that with a very small minority of investors currently able to max out the current £20,000 tax-free limit, the additional £5,000 allowance will likely solely benefit a small group of wealthier investors who are able to take advantage of it."
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Don't miss out on tax-free savings
How does an ISA work?
An ISA is a type of savings account but with tax benefits: you don't pay tax on any interest you earn.
The most common types are cash ISAs and stocks and shares ISAs (where your money is invested in the stock market).
How much can I put in?
Everyone over 16 has an annual ISA allowance of £20,000. From the age of 16, you can pay into a cash ISA, but you must be over 18 to invest in a stocks and shares ISA.
How many ISAs can I have?
There is no limit to the number of ISAs you can have overall, but you can only pay into one of each type in a single tax year.
Remember: your annual contributions cannot add up to more than £20,000.
Can I take my money out of an ISA at any time?
If you choose to have a fixed-term ISA, you may earn more interest, but you can't withdraw your money before the end of the fixed term without losing that bonus.
Why does it make sense for me to max out an ISA?
ISAs are a flexible and tax-efficient way of saving for everyone – even under-16s can take out a junior ISA.
Allowing annual deposits to grow year on year can result in a tidy sum that you can withdraw tax-free when you need it.
What is a LISA?
A Lifetime Individual Savings Account (LISA) is open to anyone aged 18 to 39 who wants to save for retirement or buy their first home.
You can put in £4,000 a year, but there is a 25 per cent penalty if you withdraw the money before you turn 60 or for any purpose other than buying a first home.
How do I get a Government bonus?
You get a 25 per cent bonus on what you save into a LISA, so if you put in £4,000, that's a guaranteed return of £1,000.
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