Investment groups have cheered today after the Chancellor confirmed a shake-up of individual savings accounts (ISA) that will aim to unlock a flow of investment into the private markets and British listed companies.
In his Autumn statement, Hunt laid out an ISA reform road map that will look to boost stock ownership among savers as well as free up money to flow into so-called long-term asset funds, a vehicle designed to invest in illiquid assets like private equity and property.
Savers will also be able to only pay into multiple types of ISA each year, rather than the current regime which restricts ISA tax breaks to just one type of account.
“The government is making changes to simplify ISAs and provide more choice, meaning it will be easier for people to choose the best ISA accounts for their needs and move money between them,” the Chancellor wrote.
“This involves digitalising the ISA reporting system to make it more effective, as well as expanding the investment opportunities available in ISAs to include Long-Term Asset Funds and open-ended property funds with extended notice periods.”
ISA holders are exempt from tax on savings interest, dividends or capital gains on funds held in their accounts.
The inclusion of long term asset funds will allow money flow into more in illiquid assets, which have been shut out from the existing regime as ISA assets need to be able to be sold within 30 days.
City figures welcomed the move today and said it was a “victory” for those lobbying for changes to the current regime.
“This is a common sense move in a segment of the market that has been crying out for clarity for some time, and particularly after the recent public intervention by HMRC,” said Tom Callaby, a financial services Partner at law firm CMS.
“Retail participation in the securities market in the UK is well behind the US and anything that can help boost retail investment is a positive for investors and the UK capital markets.”
Commenting on the inclusion of long term asset funds, retail investment group Wealth Club said retail investors would now be able to tap into growth in the private markets.
“With companies staying private for longer, much of the world’s growth and innovation is accruing in private hands,” said Jonathan Moyes, head of investment research . “The decision to allow Long-Term Asset Funds within an ISA provides investors with the potential to gain exposure to this growth, in a tax efficient manner.”
The changes may open the door to a wider overhaul of the regime as ministers look to boost share ownership in the UK.