HM Treasury has opened a consultation seeking views on how to design and implement a UK-focused ISA.
- The UK ISA was proposed in the Spring Budget 2024.
- It will have its own annual ISA allowance of £5,000, which is in addition to the Current ISA allowance of £20,000.
- The main objective for the UK ISA is to support 'a culture of investment in the UK'.
- The different investments that could be included in a UK ISA are Ordinary shares, collective investment vehicles, corporate bonds, gilts and cash.
- As a starting point, the government could replicate some of the previous approaches to Personal Equity Plans (PEPs) for the UK ISA.
- The aim will be to replicate Existing ISA rules where possible to provide consistency. There will be a trade-off with ensuring the design meets its policy objective and some bespoke rules will be required.
- Unique to a UK ISA, ISA managers would be required to monitor qualifying investment rules for any restricted offering on an ongoing basis.
The consultation will run from 6 March 2024 to 6 June 2024.
Summary of consultation questions
Question 1: Should ordinary shares in UK-incorporated companies that are either listed on a UK-recognised stock exchange or admitted to trading on a UK-recognised stock exchange be eligible for the UK ISA?
Question 2: Should collective investment vehicles be eligible for the UK ISA and if so, which vehicles specifically? What should be the minimum requirement for each of the underlying investments and how would each be monitored by ISA managers?
Question 3: Should corporate bonds be eligible for the UK ISA?
Question 4: Should gilts be eligible for the UK ISA?
Question 5: Are there other investments that already qualify for an ISA that should be eligible for the UK ISA? How would they meet the policy objectives?
Question 6: Should the UK ISA allow subscriptions to multiple UK ISAs in the same tax year?
Question 7: Should transfers from any type of ISA to a UK ISA be allowed? Should there be a limit on transfers from other types of ISAs to a UK ISA?
Question 8: Are there any downsides to the government’s proposals on transfers out of a UK ISA?
Question 9: Should the UK ISA have cash-holding rules? Which rules should be included in the UK ISA?
Question 10: Are there any other design features that the government should consider at this stage?
Question 11: Are there any other unintended consequences from this approach? Question 12: Would you be interested in offering a UK ISA based on the design set out in chapters two and three?
Question 13: How long would it take for you to launch a UK ISA product and when would you start building it following this announcement?
Question 14: What would the cost implications be and what operational changes would you need to undertake?
Question 15 What, if any, issues do you foresee from a compliance perspective for the UK ISA? Please provide details.
Useful guides on this topic
ISA Limits
What are the Individual Savings Account (ISA) investment limits? How much can I invest in an ISA each year?
ISA (subscriber guide)
Detailed guide to Individual Savings Accounts (ISAs) and tax-free savings.
External links
