AJ Bell has written to new chancellor Rachel Reeves, urging the Labour government to deliver radical Isa simplification to make it easier for people to invest.
The party has recommended merging Cash Isas, Stocks and Shares Isas, Junior Isas and Innovative Finance Isas to create a single ‘One Isa’ product.
Doing this will make it simpler for those holding money in Cash Isas to transition towards long-term investing, it said.
AJ Bell also said government should consider increasing the overall Isa allowance from £20,000 to £25,000 to enable a greater flow of funds to UK capital markets.
HMRC data suggests 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.
AJ Bell claims that if just half of that money was invested for the long term, an additional £30bn of investment would be unlocked.
The actual figure may be far higher, it adds, given that HMRC’s data indicates many of those individuals hold a Cash Isa balance far in excess of £20,000.
Labour committed to Isa simplification in their plan for ‘Financing Growth’, published in January.
After winning the general election, it also vowed to “unashamedly champion” the UK’s financial-services sector.
Other aims and priorities include streamlining the Financial Conduct Authority’s 10,000-page regulatory handbook.
AJ Bell chief executive officer Michael Summersgill said: “AJ Bell has campaigned for radical Isa simplification for years and wholly supports Labour’s intention to pursue fundamental reform in this area.”
He added: “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.
“If radical Isa simplification is coupled with sensible reforms to the advice guidance boundary, the UK will have the foundations for an investing revolution, benefitting individuals and the wider economy.”
