Reeves Should Kill All the ISAs — Except the British ISA

So long, it seems, to the British ISA, or individual savings accounts.

The idea, promoted by former Chancellor of the Exchequer Jeremy Hunt, was to have given investors an extra £5000 ($6,600) allowance a year to invest tax free on top of the current £20,000 – but only to invest in UK-listed companies. That first bit was a perfectly popular idea. The British love ISAs: More than 40% of adults have one; the second wasn’t. Critics noted that adding a new type of ISA would introduce yet more complexity to an already incomprehensible system; that the whole exercise ran the risk of leaving UK investors underdiversified; that “forcing” investors into the UK market is a type of financial repression; and crucially that, at £5000 a head, it could never bring in enough investment to revitalize the UK’s depressed and dwindling stock market. Those same critics are thrilled by reports in the press this week that new Chancellor Rachel Reeves is planning to abandon the whole thing. Hooray, says the chief executive officer of investing platform AJ Bell, Michael Summersgill. The Brit ISA was never anything but “a political gimmick” doomed to failure. The new government deserves “huge credit” for “consigning it to the policy dustbin.”