Sunak and Hunt split over new ‘Great British Isa’ allowance for savers

rishi and hunt

Rishi Sunak and the Chancellor are at loggerheads over plans to increase the £20,000-a-year Isa allowance to boost investment in British companies, The Telegraph has learned.

The Prime Minister and Number 10 officials are understood to be pushing back against proposals under consideration at HM Treasury for a new “Great British Isa”, which would allow savers investing exclusively in British stocks to invest an extra £5,000 a year in Isas tax free, taking their annual limit to £25,000.

Sources said while Mr Hunt is considering the move in a push to boost investing similar to the 1980’s “Tell Sid” campaign, the Prime Minister and his officials are said to be against the plan.

The view in Number 10 is that ministers should not be telling savers how to invest their money and have been told there is little appetite from investment providers for the new Isa, sources said.

There are also said to be concerns that the changes likely will not come into force until the 2025-26 tax year well past the date of the next general election.

Treasury officials are yet to finalise Isa and savings reforms, with final decisions to be made closer to the Budget on March 6.

Mr Hunt, ministers and officials have been meeting with industry stakeholders this month to discuss what could be included in the Budget, people familiar with the discussions said.

This paper understands that the Treasury’s focus at the moment is looking at ways to cut taxes and that other reforms will be decided upon if the Office for Budget Responsibility, the spending watchdog, forecasts extra fiscal headroom.

In November a group of City figures, including former pensions minister Baroness Altmann and the bosses of high-profile investment groups such as Panmure Gordon and Shore Capital, wrote to the Chancellor pushing for the introduction of a so-called Great British Isa.

They said it would “drive interest from a wider pool of investors and create a multiplier effect, reviving interest in raising equity in the UK, driving economic growth, spreading prosperity and boosting tax revenues”.

Baroness Altmann said: “Brexit was supposed to be about boosting Britain and it is hard to see how encouraging pension funds and Isa investors to invest overseas instead of the UK is the way most taxpayers want their funds spent.

“If Isa investors don’t invest in Britain, then the Government will have to do it and the economy will be weaker. We are in danger of losing our financial position [without investing in UK stocks].”

Around £67bn is currently invested in 11.8 million Isas across the country. According to HM Revenue and Customs, the value of funds held in stocks and shares Isas increased 14pc during 2021-22.

In the November Autumn Statement, the Chancellor announced that from April savers will be allowed to open multiple Isas of the same type in a single tax year without losing their £20,000 allowance.

A spokesman for the Government said: “We don’t comment on speculation about Budget measures.

“We are already making changes to simplify Isas and provide more choice, meaning it will be easier for people to choose the best Isa accounts for their needs and move money between them.”

Recommended

The best one-stop funds for your Isa in 2024

Read more

%n

Discover Telegraph Wine Cellar’s new wine club. Enjoy expertly chosen bottles at exclusive member prices. Plus, free delivery on every order.