UK chancellor Jeremy Hunt last week announced a tax-free UK ISA (individual savings account) in an effort to boost investment in British assets and revitalise confidence in London’s ailing financial markets.
Hunt was under pressure to do something. UK shares have underperformed for years and the London market has suffered a number of high-profile departures.
However, the new ISA didn’t impress tax campaigner Dan Neidle. He notes that FTSE 100 companies such as Antofagasta and Airtel Africa, which don’t operate in the UK, can presumably go into a UK ISA while major British employers such as Google and Citigroup can’t. Indeed, most FTSE 100 companies are international firms that get most of their earnings from outside the UK.
There is also the problem of home bias. A quarter of the average British portfolio is already allocated to the UK, even though it accounts for only 4 per cent of global market capitalisation. Critics also questioned Hunt’s refusal to abolish stamp duty on UK shares.
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Overall, it’s hard to disagree with Neidle’s assessment that the UK ISA is “a sticking plaster that won’t fix the FTSE’s problems”.
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