Investment bosses welcome potential scrapping of 'doomed to fail' British ISA

Labour’s potential plan to abandon the new British ISA has been welcomed by investment bosses who argue it was “doomed to fail”, as the Treasury insisted it was still weighing up the measure.

In a U-turn from previous positions, the new administration seems set to scrap the British ISA unveiled in the Conservative government's spring Budget as a means of giving investors a £5,000 tax-free boost for UK company investments. The new Government is thought to be planning to drop the British ISA despite saying it would not do so prior to July’s general election, according to reports in the Financial Times.

Investment platform bosses have hailed the potential axing of what they deem an "ill-conceived" idea. AJ Bell's chief executive, Michael Summersgill, said the British ISA a "political gimmick that was doomed to fail in its objective of boosting investment" within UK firms.

He said: "The new Government deserves huge credit for consigning this ill-conceived idea to the policy dustbin and will hopefully now take a more sensible, long-term approach to ISA reform than their predecessors, focused on simplification for the benefit of consumers,".

Dan Olley, chief executive of Hargreaves Lansdown, said the group was "pleased" about the potential scrapping of the product "because simplicity is key when it comes to getting people to start investing".

"The UK ISA would have added complexity with little real benefit for many," he commented. "Our data clearly shows that British retail investors are already enthusiastic backers of British companies."

When the British ISA was initially announced, ex-chancellor Jeremy Hunt revealed he had been inundated with calls from over 200 City representatives urging a shake-up of the ISA system to boost investment in UK assets. The scheme was designed for individuals who fill up their £20,000 tax-free limit on an ISA, which is a savings account offering tax-free interest.

Meanwhile, Dan Moczulski, the UK managing director of trading giant eToro, argued that "more needs to be done to stimulate investment in the UK, reinvigorate our capital markets and get more people investing as well as just saving". He said: "I would like to see the new Government begin to show their cards on this issue and give us a roadmap for how they will support retail investing in the UK."