The Chancellor could increase the tax-free Isa allowance to make it easier for ordinary people to invest in British companies.
Under current rules, adults can save £20,000 a year into Isas – as Individual Savings Accounts are commonly known – without being taxed.
There are several types of account – such as cash-only or for stocks and shares – but experts believe the system is too complicated.
Jeremy Hunt is reportedly considering offering an additional tax-free Isa allowance strictly for money invested into companies listed on the London Stock Exchange (LSE).
Jeremy Hunt is reportedly considering offering an additional tax-free Isa allowance strictly for money invested into companies listed on the London Stock Exchange
It comes after Treasury officials spent weeks in consultation with experts in the City discussing ways to unlock extra funding from millions of accounts, the Financial Times has reported.
Another idea being looked at is to create an Isa that would allow holders to keep both cash and stocks in the same account.
A shake-up could be announced as soon as the Autumn Statement in November.
The news would be a boon for the City of London after a slew of big-name companies have either snubbed or announced plans to leave the LSE this year for the New York Stock Exchange.
This has thrown its reputation into crisis and there are fears even more companies will leave.
The Government is desperate to bolster British businesses and get more ordinary people – also known as retail investors – to participate in the stock market. Private ownership of shares in the UK has dropped since the 1960s, when individuals held more than half of shares by value.
But this has fallen despite the ‘Tell Sid’ era of privatisations in the 1980s, when groups such as British Gas were made public, and it is now only around 12 per cent.
Mr Hunt has already unveiled a set of policies called the Mansion House Reforms that aim to make it easier for pension funds to make investments into stocks, which are also known as equities.
Attracting more funding makes it much more likely that a company will grow.
Where Britain’s Isa cash goes
Around 12 million Isas were open in the 2020-21 financial year, according to the latest official figures, but Britons are expected to put more money into savings accounts now that interest rates are much higher.
The Bank of England has raised the base interest rate – which stands at 5.25 per cent – 14 times over the past two years.
The average long-term fixed cash Isa rate is now more than 5 per cent, according to Moneyfacts.
Most people already opt for cash Isas, with stocks and shares Isas the next most popular account.
As well as cash and share Isas, there are two other kinds called the innovative finance Isa and the lifetime Isa. Innovative finance accounts allow users to give money through ‘peer-to-peer’ lending.
This is via platforms that connect them online with individuals, businesses and property developers – but it is deemed very risky and there has been low take-up.
Lifetime Isas must be set up by savers between the ages of 18 and 40. They can either be used to buy a first home or in retirement – for either use the Government will top up the amount of money by 25 per cent.
The compexity of the system makes it a priority to simplify the system as soon as possible, argue campaigners.
A Treasury spokesman said: ‘HM Treasury is receptive to ideas of how we can make Isas more attractive to encourage people to develop a savings habit and to invest in a way that works for them.’
Compare the best DIY investing platforms and stocks & shares Isas
Investing online is simple, cheap and can be done from your computer, tablet or phone at a time and place that suits you.
When it comes to choosing a DIY investing platform, stocks & shares Isa or a general investing account, the range of options might seem overwhelming.
Every provider has a slightly different offering, charging more or less for trading or holding shares and giving access to a different range of stocks, funds and investment trusts.
When weighing up the right one for you, it’s important to to look at the service that it offers, along with administration charges and dealing fees, plus any other extra costs.
To help you compare the best investment accounts, we’ve crunched the facts and pulled together a comprehensive guide to choosing the best and cheapest investing account for you.
We highlight the main players in the table below but would advise doing your own research and considering the points in our full guide linked here.
>> This is Money’s full guide to the best investing platforms and Isas
Platforms featured below are independently selected by This is Money’s specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence.
| Admin charge | Charges notes | Fund dealing | Standard share, trust, ETF dealing | Regular investing | Dividend reinvestment | ||
|---|---|---|---|---|---|---|---|
| AJ Bell* | 0.25% | Max £3.50 per month for shares, trusts, ETFs. | £1.50 | £9.95 | £1.50 | £1.50 per deal | More details |
| Bestinvest* | 0.40% (0.2% for ready made portfolios) | Account fee cut to 0.2% for ready made investments | Free | £4.95 | Free for funds | Free for income funds | More details |
| Charles Stanley Direct | 0.35% | No platform fee on shares if a trade in that month and annual max of £240 | Free | £11.50 | n/a | n/a | More details |
| Fidelity* | 0.35% on funds | £7.50 per month up to £25,000 or 0.35% with regular savings plan. Max £45 per year for shares, trusts, ETFs | Free | £7.50 | Free funds £1.50 shares, trusts ETFs | £1.50 | More details |
| Hargreaves Lansdown* | 0.45% | Capped at £45 for shares, trusts, ETFs | Free | £11.95 | £1.50 | 1% (£1 min, £10 max) | More details |
| Interactive Investor* | £4.99 per month under £50k, £11.99 above, £10 extra for Sipp | £3.99 per month back in free trading credit (does not apply to £4.99 plan) | £3.99 | £3.99 | Free | £0.99 | More details |
| iWeb | £100 one-off (no fee until end of 2023) | £5 | £5 | n/a | 2%, max £5 | More details | |
| Accounts that have some limits but attractive offers | |||||||
| Etoro* No Isa or Sipp | Free | Investment account offers stocks and ETFs. Beware high risk CFDs in trading account | Not available | Free | n/a | n/a | More details |
| Freetrade* No investment funds | Free for Basic account, £4.99 per month for Standard with Isa £9.99 for Plus | Freetrade Plus with more investments and Sipp is £9.99/month inc. Isa fee | No funds | Free | n/a | n/a | More details |
| Vanguard Only Vanguard’s own products | 0.15% | Only Vanguard funds | Free | Free only Vanguard ETFs | Free | n/a | More details |
| (Source: ThisisMoney.co.uk Sept 2023. Admin % charge may be levied monthly or quarterly | |||||||
