Plans for an additional ISA allowance of £5,000 to invest in UK companies remain very much up in the air despite the on-going consultation, an expert has warned.

Chancellor Jeremy Hunt set out plans for a British ISA in his Spring Budget, with a consultation on the idea running until June 6.

Neil Rayner, head of advice at wealth firm True Potential, told Express.co.uk: “The consultation period on the Government’s UK ISA policy until June is needed to ensure the proposals are robust.

“However, the consultation period also makes them a hostage to fortune, what with a looming general election and no plans, as of yet, for Labour to continue on with the UK ISA should they win.”

He said he is “cautious” about whether the plans will become a reality before the election takes place this year, encouraging savers to maintain a “flexible investment strategy” given how market dynamics can change.

The consultation outlines that the British ISA is intended to support a “culture of investment in the UK” with the extra £5,000 to be added on top of the current £20,000 ISA allowance.

Mr Rayner warned the extra allowance would add more complexity to the savings environment, suggesting a more simplified way to open up more ISA investments.

He explained: “Raising the base ISA allowance to £25,000 and indexing future annual increases to inflation would be a more effective strategy, ensuring that savings capacity keeps pace with economic change.

“Furthermore, by abandoning the idea of geographic restrictions on ISA investments the government would enable British savers to maintain as diversified a portfolio as possible, especially pertinent in light of the FTSE 100’s recent underperformance compared to other global financial markets.”

Concerns wre previously raised that the extra ISA allowance may only be used by a narrow group of savers.

Pensions director at Aegon, Steven Cameron, said: “The British ISA is expected to appeal primarily to individuals who already fully use their existing £20,000 ISA allowance.

“Within this, those who have chosen to hold most or all in cash rather than stocks and shares are less likely to be suited to this.

“Even for individuals ‘maxing out’ their stocks and shares ISAs, there are questions over the appropriateness of increasing exposure to UK equities rather than spreading their investment risks through a more geographically diversified portfolio.

“Given the narrow target market, the British ISA looks like a very niche product. But the Government proposals look set to create a lot more complexity to the ISA regime.

“With a maximum annual subscription of £5,000, it could prove very challenging to cover costs while offering this product at a charge level that provides value for money.”

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