After the 2024 Budget, here’s how I’d invest £5,000 in UK stocks

As the government announces plans to introduce a British ISA with a £5,000 contribution limit, Stephen Wright is thinking about which UK stocks to buy.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

British flag, Big Ben, Houses of Parliament and British flag composition

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

One of the highlights of the Budget for investors was the introduction of the British ISA. This allows UK investors to invest £5,000 in stocks without having to pay tax on dividends or capital gains.

As someone who already owns UK shares, the initiative is an opportunity to buy stocks I would have bought anyway in a tax-advantaged way. Here’s how I’d go about doing it today.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Should you invest £1,000 in J D Wetherspoon Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if J D Wetherspoon Plc made the list?

See the 6 stocks

Contribution limit

A £5,000 contribution increases the existing Stocks and Shares ISA contribution limit by 25%. And I think the best way to approach it is by viewing it as part of the same thing. 

The thresholds for dividend tax and capital gains taxes are set to fall in April. So both passive income investors and those looking to build wealth stand to benefit from an increased allowance. 

Beyond the British ISA, there were some other interesting announcements in the Budget. And I think there are some UK businesses that stand to benefit in ways that aren’t immediately obvious. 

As a result, I have stocks on my radar from both the FTSE 100 and FTSE 250. If I had an extra £5,000 to invest in my Stocks and Shares ISA, I’d look to divide it between two companies. 

Consumer products

At first sight, it might be difficult to see how Unilever (LSE:ULVR) stands to benefit from the 2024 Budget. But I think the big cut to National Insurance could help the company.

One of the big issues for Unilever recently is that some of its brands have been struggling to grow, with only 38% gaining market share. This has been due to customers trading down to cheaper alternatives. 

While the company is making moves to try and combat this, there’s a risk it might continue. But an additional £900 for the average worker might help arrest the shift in consumer choices.

The market didn’t agree, with the stock falling on the day of the announcement. But I think that this looks like a good opportunity to buy shares in a quality company to hold for the long term.

Hospitality

Alcohol duty stayed fixed, but the hospitality sector had been hoping for a VAT reduction that ultimately didn’t come. Yet this could actually be a good thing for J D Wetherspoon (LSE:JDW).

After reducing its debt significantly over the last few years, the company is in a decent position to withstand a downturn in the industry. It’s not so clear the same is true for its rivals.

Without a tax cut, there’s a risk of lower profits in the short term. But I think difficult trading conditions in the sector could strengthen the company’s competitive position.

If that happens, then the result should be greater profitability over time. And that’s why I’d be looking to buy the stock for my British ISA if I were able to do so tomorrow.

New ISA

I’m excited by the prospect of a British ISA. The chance to invest in UK stocks without having to pay tax looks like a great opportunity to me. 

There are plenty of FTSE 100 and FTSE 250 companies I’d be interested in buying shares in. So I’m looking forward to building a portfolio of different businesses over time.

Should you invest £1,000 in J D Wetherspoon Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if J D Wetherspoon Plc made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Stephen Wright has positions in J D Wetherspoon Plc and Unilever Plc. The Motley Fool UK has recommended Unilever Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

£20K invested in Tesla stock last April is now worth…

Despite all the bad headlines lately, Tesla stock has put in a storming performance over a 12-month timeframe. Is this…

Read more »

Investing Articles

If a 40 year old invests £600 a month in a SIPP, here’s what they could have by retirement

With no retirement savings at 40, an investor could put £600 a month into a SIPP and grow its value…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Why hasn’t its 9.9% yield boosted the Phoenix share price?

Phoenix Group has a dividend close to double digits, but saw a weak share price performance in recent years. Christopher…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

With average 10% yields, these mid-cap FTSE shares could supercharge a passive income portfolio

Some of the best passive income gems can be found on the UK's smaller indexes like the FTSE 250 and…

Read more »

A coin being dropped into a piggy bank
Investing Articles

As the Barclays share price tanks 19% in 2 days, is this a great buying opportunity?

As a trade war sends the Barclays share price into a tailspin, Andrew Mackie steps back to look at the…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is Fundsmith Equity still a good choice for a Stocks and Shares ISA in 2025?

Many Britons hold the Fundsmith Equity fund in their Stocks and Shares ISAs. Is this still a good move? Edward…

Read more »

Investing Articles

Nvidia stock is down 24% this year. Time to buy the dip?

Christopher Ruane has been eyeing Nvidia stock as a potential addition to his portfolio for a while. Is a recent…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Down 25% since January, this resilient dividend stock’s catching my eye

Maintaining the UK’s rail, water, and energy infrastructure isn’t the most exciting business. But it has made this a solid…

Read more »