The reforms are expected to generate a new wave of share ownership among retail customers amid widespread investor apathy. Claire Trachet, Founder/CEO of the UK’s leading business advisory, Trachet, comments on the need for further government support in the private investment scene.
Reports from the Treasury reveal that the Chancellor of the Exchequer, Jeremy Hunt, will unveil the most dramatic overhaul to individual saving accounts (ISAs) in over ten years. The reforms seek to alter rules around fractional shares and long-term asset funds, whilst also increasing the £20,000 threshold of the tax-free savings allowance. These details come at a time where investors are becoming increasingly apathic towards the London Stock Exchange, with a survey from the Quoted Companies Alliance (QCA) finding that one in four quoted companies currently see no advantage to maintaining a share listing in London. CEO/Founder of the UK’s leading business advisory Trachet, Claire Trachet, discusses the steps that the government should continue to take to boost confidence and investment into businesses across the country.
Wednesday’s proposed reforms seek to drive share ownership among retail customers, HMRC’s existing policy prevents ISAs from holding less than a full share of stock, this can require investors to sell their stakes and incur taxes on the gains. Reforming such policy could enable retail customers to invest into expensive US stocks such as Apple, Amazon and Tesla. These reports follow from July’s Mansion House speech, which set out reforms to UK pension scheme’s – freeing up the trillions of pounds worth of capital currently locked away in funds.
According to Claire Trachet, these reforms mark an essential first step in crafting the fertile ground required for renewed interest in the UK’s investment scene. Since the 1960s private share ownership has declined substantially, with individual investors currently holding less than 12% of quoted shares by value. Despite UK adults being subscribed to almost 12m ISA accounts in 2020-21, the majority have opted for cash ISAs rather than investment products.
Claire Trachet, CEO/Founder of Trachet, comments:
“The proposed ISA reforms mark an essential step towards reshaping the UK’s investment landscape. At a time where investor apathy remains significantly high, the treasury must look at creative ways of freeing up the vast amounts of capital currently locked away in savings and pension funds.
“Combined with July’s Mansion House speech, investor’s should keep a close eye on the London Stock Exchange, alongside the Bank of England’s decision to continue their interest rate pause. We expect to see a flurry of renewed enthusiasm for the UK’s investment scene in the coming months.
“However, these plans to overhaul ISAs and pension funds, must be delivered in tandem with extensive support for emerging startups. In particular, AI startups represent an enormous mine of untapped potential, with experts estimating that the sector could add a staggering £400 billion to the UK economy.”
HedgeThink.com is the fund industry’s leading news, research and analysis source for individual and institutional accredited investors and professionals
