Reeves seeks to boost UK share ownership in ISA overhaul
Chancellor Rachel Reeves is looking to boost UK share ownership as part of her plans to overhaul ISAs, with potential measures including a minimum holding of British companies and a stamp duty tax break.
The move is an evolution of the previously scrapped Conservative plan to create a ‘Brit ISA’ and comes as Reeves searches for growth-enhancing measures in her looming November Budget.
Reeves is already planning a major ISA shakeup which would shift Brit’s savings from cash to domestic stocks in a bid to drive retail investing, as cash ISAs remain the country’s most popular account choice.
However, people briefed on her thinking say she is also eyeing reforms to the stocks and shares ISA in order to boost the London market, according to reports in the Financial Times.
Treasury ideas
According to anoter person who held talks with the chancellor, the Treasury is reportedly also considering whether ISAs should hold a minimum amount in UK equities, similar to the ‘personal equity plans’ that were sold until 1999.
The moves would form part of a potential radical redesign of the UK’s tax-free ISA regime, marking the biggest changes since it came into force in 1999 under chancellor Gordon Brown.
Reeves is also mulling capping the annual amount allowed in cash ISAs, potentially halving the tax-free ceiling from £20,000 to £10,00, after initial plans to change the ceiling were halted in the summer following fierce backlash.
The Treasury said: “The chancellor has been clear that she wants to get Britain investing again, so British companies can grow and British savers who choose to invest can get more in return.”
A government official confirmed that Reeves was also “considering how to ensure any investment unlocked through reform benefits UK companies and growth”.
The Treasury killed off plans drawn up by the prior Conservative government for a new UK ISA which would have given investors another £5,000 tax-free to invest in British companies, on the grounds it would over complicate the market.
But, under the model being considered by Reeves, the existing stocks and shares ISA could have a new requirement to hold a certain percentage of UK-listed stocks, backed by a stamp duty break.
This follows speculation that the Treasury is debating cutting stamp duty on UK stocks to 0.5 per cent.
City figures weigh in
Some industry figures have urged Reeves to go further, arguing further stamp duty cuts would be more beneficial to ISA reforms, instead of attempting to bring back the “Brit ISA”.
Tom Selby, director of public policy at investment site AJ Bell, said: “If Rachel Reeves wants to plant a British flag in her Isa reforms, she should review the impact of stamp duty on UK shares rather than attempting to revive the fundamentally flawed UK Isa proposal cooked up by the last government.
While the multibillion-pound annual cost of scrapping stamp duty across the board might make the chancellor wince, creating a specific carve-out for ISAs to support her retail investing drive could be achieved at a fraction of this cost.”
However, not all City figures are in favour of the reforms, with building societies in particular arguing capping the tax-free allowance would limit their funding and send the cost of mortgages soaring.
Susan Allen, chief executive of Yorkshire Building Society said cash ISAs were “a responsible way to build financial resilience.”
The government and regulators have already taken steps to urge people to invest, with the Financial Conduct Authority confirming earlier this year that companies would be able to provide “targeted supported” to investors.
The government will also launch a campaign in 2026 set to raise awareness of the benefits of investing for individuals and the wider economy.