Jeremy Hunt faces opposition to plans to shake up Isas

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Chancellor Jeremy Hunt is facing opposition to his plans to shake up individual savings accounts amid growing scepticism over the government’s efforts to funnel cash into London-listed companies.

Treasury officials, in meetings with capital market providers and investment platforms, continued to raise the idea this month of a so-called UK Isa, according to two people briefed on discussions.

Talks came as the government geared up for a pre-election Budget early next month with reforms to the tax-free savings regime floated alongside a wider attempt to rejuvenate retail investment, including the sale of NatWest shares as soon as this summer.

Proposals include an additional £5,000 tax-free allowance for UK-listed equities only, on top of the current £20,000, to encourage more people to invest in British companies.

Officials have also floated restricting a portion of the current tax-free allowance solely for the same purpose.

Hunt told finance executives last week he was “very attracted” by the idea of introducing an incentive for investors to use their Isas to invest in UK equities.

“Do I want to do things that mean that more UK capital is invested in our most promising companies? Absolutely. I think that something like a British Isa could be very good at that,” he said.

However, some political advisers have expressed serious misgivings in meetings. They argue that the proposals risked narrowing choice and adding complexity to the Isa savings regime. Industry figures also pointed to the government’s failure to deliver on previously announced plans.

A possible UK Isa was raised before last year’s Autumn statement, but dropped when the chancellor decided to use whatever fiscal firepower he had for £20bn in cuts to business and personal taxation.

Hunt instead announced that savers would be permitted to open multiple Isa accounts…