After “modest” Isa reform in the chancellor’s Autumn Statement, AJ Bell is calling for long-term Isa simplification in the Spring Budget.
The firm wants to see an increase in the Isa allowance and any ideas of a Great British Isa scrapped.
Tom Selby, director of public policy at AJ Bell, also suggested the Lifetime Isa could be “supercharged” by reducing the government's early exit charge and increasing the minimum property price.
He said: “Jeremy Hunt set out very modest reforms to Isas in his Autumn Statement, none of which amount to the radical simplification savers and investors are crying out for.
“The Budget could be this chancellor’s final opportunity to strip unnecessary complexity out of the Isa rules and demonstrate he is on the side of Brits who do the right thing and save for their financial future.”
Selby said a Great British Isa, an additional allowance to be invested in the British economy, would not be the way to go for the government.
Rumours about its introduction were rife ahead of the Autumn Statement but have dampened after it failed to be mentioned.
Selby added: “If government is intent on using Isas to drive more investment into UK-based companies and funds, there are other ways to do it. For example, scrapping stamp duty on UK investments or exempting investments in UK companies and funds from IHT would provide an incentive for investors to back UK businesses.
“Given most investors have a natural bias towards UK companies and funds anyway, the most straightforward answer would be to simply to increase the Isa allowance.”
AJ Bell also wants to see the end to a freeze on the personal savings allowance which has not changed since 2016.
Selby added: “Doubling the personal savings allowance would mean that £20,000 held in a 5 per cent savings account would not be taxed for basic and higher rate taxpayers, ending the penalty on those who do the responsible thing by building up a cash savings buffer for a rainy day.”
A raft of Isa changes were featured in documents accompanying chancellor Jeremy Hunt’s Autumn Statement back in November.
The government said it would make changes to “simplify Isas and provide more choice”.
From April 2024, savers will be able to hold more than one of a particular type of Isa in a year. Under current rules you can only pay into one of each type of Isa in a tax year.
Other changes included allowing partial transfers between providers, removing the requirement to reapply for an existing Isa annually and expanding the Innovative Finance Isa to include long-term asset funds.
tara.o'connor@ft.com
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