By Salma El-Sakka
Financial expert Martin Lewis has outlined how the government's proposed Starter ISA could provide a "boost" for first-time investors, following Chancellor John Healy's announcement in the autumn Budget.
Chancellor reverses Cash ISA cut and unveils Starter ISA
Healy confirmed on 28 October that the annual Cash ISA limit will remain at £20,000, reversing earlier proposals to reduce it to £12,000. He also pledged to work with the industry to create a new "Starter ISA" aimed at rewarding first-time investors, though no launch date or detailed design was provided.
Industry consultation expected
The Treasury plans to hold an industry-wide consultation in the coming months to develop the Starter ISA. Experts suggest it may offer additional benefits or education to help savers transition into stock market investing.
Lewis proposes bonus on initial investments
Lewis, founder of Money Saving Expert, had previously urged the government to incentivise young people to invest. He suggested a bonus of 10% to 15% on the first £2,000 to £3,000 invested in a shares ISA, giving nervous investors "wiggle room" if markets fall in the short term.
Concerns over complexity
Brian Byrnes, director of personal finance at Moneybox, warned that adding another ISA to an already complex system "sets off alarm bells," though he acknowledged the direction toward incentivising investing is positive.
HMRC to develop detailed design
HM Revenue and Customs said on 29 October that the detailed design for the new ISA incentive will be developed with the industry.
