ISA allowance could be raised above £20,000 if savers invest in British business

Chancellor Jeremy Hunt is considering creating an additional ISA allowance to promote investment in British companies.

The additional tax-free allowance, on top of the current £20,000 a year, would apply to money invested in businesses listed on the London Stock Exchange.

Policy makes hope this would help revive the London Stock Exchange after many big name companies announced plans to leave for the New York Stock Exchange.

Ministers are also looking at creating a new type of ISA that would allow savers to keep both cash and stocks in the same account.

At present, there are cash ISAs and stocks and shares ISAs, but these are different types of account.

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A person can currently invest up to £20,000 a year into ISAs without paying any tax amount or on any interest earned.

Some 12 million ISAs were opened in the 2020 to 2021 financial year with high interest rates encouraging Britons to open more savings accounts.

The Bank of England held the base interest rate at 5.25 percent in its latest decision last week.

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At the time of writing, the top-paying easy access ISA according to is with Leeds Building Society and Chorley Building Society, which both pay 4.8 percent.

Savers opting for a Notice ISA can get a top 5.05 percent with Melton Building Society.

The news comes after the Chancellor unveiled his Mansion House Reforms to open up pension funds to more investments in stocks.

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The changes promise to increase a retired person’s pensions income by £1,000 a year.

Mr Hunt backed a deal between nine of the UK’s biggest defined contribution (DC) pension providers.

The group of providers committed to allocating five percent of their assets in default funds to unlisted equities by 2030.

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