Guy Sears, Interim CEO of the Investment Association, offered a positive response to measures in the budget that promise to encourage savings, productivity and investment.
"The importance of long-term saving and investment are at the heart of today's Budget,” said Sears. "It is only by connecting millions of savers effectively with productive opportunities for investment that we will achieve both the economic growth and the financial returns essential to create a wealthier society."
Of particular significance were reforms to the ISA allowance which will see the limit raised to £20,000 along with the creation of a Lifetime ISA for individuals under 40.
"Today's Budget has a major emphasis on long-term savings,” added Jonathan Lipkin, Director of Public Policy at the Investment Association. “First, and importantly, it has left the incentives in place for people to continue to save for later life through workplace pensions, an essential foundation.
"At the same time, the new lifetime ISA looks like an exciting development that can incentivise younger people with increasingly difficult and competing savings needs to put money away for key life stages. This could help to create a more widespread savings culture in the UK, particularly if it can be used for long-term investment that will both fund economic growth and deliver strong returns.”
He also explained that raising the limit to £20,000 would give a vote of confidence in the ISA brand and a further opportunity for people to save even more for their futures without paying any tax on their returns.
"The new savings regime that results from these changes offers the benefits of attractive incentives and flexibility,” said Lipkin. “We will look forward to working with the Government as it moves to implementation."
Meanwhile, Andrew Ninian, Director of Corporate Governance at the Investment Association, offered his insights into the chancellor’s ‘Productivity Action Plan.’
"Productivity can drive economic growth and encourage UK businesses to invest for the long term,” said Ninian. "The Action Plan the Investment Association is launching next week, referenced by the Chancellor today, will outline how we as investors can play a fundamental role to help improve UK productivity and support long-term investment. The Action Plan seeks to deliver ambitious and achievable remedies to the ills of some of the most serious causes of short-term thinking in the British economy.
"The investment industry remains steadfast in its commitment to play its part in fixing the UK productivity puzzle and help fix the challenge of our generation."
Also welcomed were changes to improve simplicity and fairness for fund investors, as a result of a direct bid by The Investment Association. The changes mean that from April 2017, bond fund managers will stop automatically collecting 20% tax from their income payments to investors.
Jorge Morley-Smith, Director of Business Support and Promotion, explained: "From April, basic-rate taxpayers will be exempt from tax on the first £1,000 of interest (£500 for higher-rate taxpayers), and receiving distributions without tax deducted means that you will not need to file tax returns simply to claim tax back. It also ensures that UK funds continue to be an attractive and competitive savings vehicle for UK and overseas savers."