ISA reform plan put to Hammond

A plan to reform Individual Savings Accounts (ISAs) has been put to the chancellor in time for Autumn Statement 2016 in less than four weeks’ time.

Submitted yesterday, the plan is necessary because the UK’s current saving policies are “a mess,” amounting to an “incoherent jumble,” says the plan’s author Tom McPhail.

So “all the different competing ISA regimes [should be] consolidated into one ‘Super ISA,’ Mr McPhail, an adviser at Hargreaves Lansdown wrote in the Financial Times.

Such a financial product would give savers the opportunity to hold cash, shares, funds and incoming peer-to-peer investments in a single, comprehensive account, the plan says.

Not only would this untangle the web of different ISAs, but it would also permit the Treasury to retain some of the policy objectives it has committed to with one of its latest ISAs, the LISA.

“For the under-40s, withdrawing money from a Super Isa to buy their first home, the Treasury could still give a Help to Buy-style top- up,” McPhail said.

The problem he cites with the current LISA framework is that while it is meant for the self-employed, two-thirds of them are ineligible for the LISA because they are over the age of 40.

In addition, research suggests that most LISA holders will use it as a long-term investment arrangement rather than for a house deposit, which was one of the government’s aims.

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