Reeves seeks to increase UK shareholding in ISA overhaul

Saturday 18 October 2025 10:59
| Updated:

Saturday 18 October 2025 11.00

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Chancellor Rachel Reeves wants to increase UK shareholding as part of her plan to overhaul ISAs, with potential measures including minimum ownership of UK companies and stamp duty tax relief.

The move is an evolution of previously scrapped Conservative plans to create a ‘Brit ISA’ and comes as Reeves seeks measures to boost growth in November’s upcoming Budget.

Reeves has planned a major overhaul of ISAs that would shift Britons’ savings from cash to domestic shares in a bid to encourage retail investment, as cash ISAs remain the most popular account choice in the country.

However, people familiar with his thinking say he is also eyeing reforms to stocks and shares ISAs to improve the London market, according to a report in the Financial Times.

Treasury ideas

According to another person who held talks with the chancellor, the Treasury is reportedly also considering whether ISAs should have a minimum amount in UK equities, similar to the ‘private equity plans’ sold until 1999.

The measures would be part of a potential redesign of the UK’s tax-free ISA regime, marking the biggest change since the regime came into force in 1999 under Chancellor Gordon Brown.

Reeves is also considering limiting 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 a backlash.

The Treasury said: “The Chancellor has been clear that he wants the UK to invest again, so that British companies can grow and British savers who choose to invest can earn greater rewards.”

A government official confirmed that Reeves is also “considering how to ensure any investment unlocked through the reforms benefits UK companies and growth”.

The Treasury scrapped plans laid out by the previous Conservative government for a new UK ISA that would have given investors another £5,000 tax-free to invest in UK companies, arguing it would have complicated the market too much.

However, under the model being considered by Reeves, existing shares and shares ISAs could have a new requirement to hold a certain percentage of shares registered in the UK, backed by stamp duty relief.

This follows speculation that the Treasury is debating cutting stamp duty on UK shares to 0.5 per cent.

The city’s numbers are taken into consideration

Some industry figures have urged Reeves to go further, arguing a further cut in stamp duty would be more beneficial to ISA reform, rather than trying to bring back the “Brit ISA”.

Tom Selby, director of public policy at investment site AJ Bell, said: “If Rachel Reeves wants to fly the UK flag in her Isa reforms, she should review the impact of stamp duty on UK shares rather than try to revive the fundamentally flawed UK Isa proposals made by the last government.

While the billion-pound annual cost of eliminating stamp duty altogether might make the chancellor wince, creating a dedicated opportunity for ISAs to support his retail investment efforts could be achieved at a fraction of the cost.”

However, not everyone in the City supports the reforms, particularly building societies who argue that capping tax-free allowances will limit their funding and send mortgage costs 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 taken steps to encourage people to invest, with the Financial Conduct Authority confirming earlier this year that firms would be able to provide “targeted support” to investors.

The government will also launch a campaign in 2026 to raise awareness of the benefits of investing for individuals and the wider economy.