The new Labour Government has axed plans to introduce a £5,000 British ISA as part of its upcoming Autumn Budget, sources claim.
Ahead of the General Election, Prime Minister Keir Starmer's party floated the idea to voters that would have placed savers' money into London-listed stocks tax-free.
However, Chancellor Rachel Reeves is understood to have scrapped plans for a British ISA amid concerns it could "complicate" investing for people.
One official told The Financial Times: "We are not planning to complicate the ISA landscape even further."
This £5,000 tax-free account would have existed on top of the existing ISA allowance, which is currently £20,000.
As it stands, Britons can deposit up this amount in different types of ISA products without having to pay money to HM Revenue and Customs (HMRC).
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Examples of ISA accounts include cash ISAs, stocks and shares ISAs, lifetime ISA and innovative finance ISA.
Despite reports of the British ISA being no more, the Treasury has claimed that no final decision has been made by the Government.
A spokesperson told GB News: "No decisions have been made. The Government will provide further information on its plans for the British ISA in due course."
Plans for the product were drawn up by the last Conservative Government to incentivise investing among savers and bolster stocks in the UK.
The previous Chancellor Jeremy Hunt praised the British ISA in his Spring Budget back in March.
He claimed that saves will “benefit from the growth of the most promising UK businesses”.
Labour's decision to not continue with the ISA comes after warnings from investment firms.
Both Hargreaves Lansdown and AJ Bell claimed that an additional ISA product would make investing more complicated for savers.
James Carter, the head of Platform Product Policy, Fidelity International, agrees with these concerns.
He explained: “Whilst the proposed British ISA would have achieved an extension of the aggregate amount consumers could save and invest through ISAs, it would have proliferated the complexity of the ISA product set.
"We know that many people find it difficult to identify which products best suit their saving or investment needs and struggle to manage their savings across different ISA types.
"New financial products must be developed with consumers’ needs at their core.
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“Complexity destroys confidence, leaving many individuals missing out on vital opportunities to strengthen both their short and long-term financial position.
"The ISA product set, with multiple ISA types and complex rules for transfers between them creates confusion for investors. It also limits the economies of scale that providers can offer.
"This can stifle innovation and worse, can raise costs for consumers. Simplification and certainty of tax treatment can allow both savers and companies to better plan and manage the products.
“Most people will find themselves managing a series of evolving financial objectives over time. However, we know that many find it difficult to identify which products best suit their saving needs."
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