Retail investment platform AJ Bell PLC (LSE:AJB) has urged Labour chancellor Rachel Reeves to commit to a “radical” overhaul of current ISA rules.
In a letter to Reeves, AJ Bell proposed a ‘One ISA’ product incorporating the currently fragmented landscape of separate wrappers for stocks and shares, cash, lifetime, junior and innovative finance products.
More radically, AJ Bell wants the current tax-free allowance to increase from £20,000 annually to £25,000.
Former Tory chancellor Jeremy Hunt proposed a similar increase, but under his plans, the extra £5,000 would be reserved for investments into British companies only.
AJ Bell’s chief executive Michael Summersgill believes this British-only caveat is unnecessary to stimulate investment into UK plcs.
He said: “Given around half of ISA assets held on AJ Bell’s platform are UK-focused, simply increasing the overall ISA allowance from £20,000 to £25,000 should naturally drive more money towards UK plc.
“Creating a genuine incentive to invest in UK assets, such as by scrapping stamp duty on UK investments, would also help achieve this aim.
“Or even more radical, the inheritance tax exemption enjoyed by AIM stocks could be extended to include UK listed shares and those funds that invest in them.”
According to Summersgill, the proposals put forward by AJ Bell could be undertaken at a limited cost to the taxpayer, but “the potential prize is substantial”.
He cited HMRC data showing there are around three million people in the UK with £20,000 or more invested in Cash ISAs and no money invested in Stocks and Shares ISAs.
“If just half of that money was invested for the long term, an additional £30 billion of investment would be unlocked,” said Summersgill.