The boss of AJ Bell has taken aim at ‘frustrating’ tax proposals that threaten to undermine the government’s ambition to boost retail investing.
Michael Summersgill warned that plans to tax cash held in stocks and shares individual savings accounts (ISAs) could backfire.
The idea was put forward as a way to stop investors getting round rules that will cut the cash ISA allowance to £12,000.
But AJ Bell suggested it was helping to create ‘complexity and uncertainty’.
It added to the lack of visibility for savers after a period which has also seen speculation over pension tax rules – which AJ Bell said has resulted in £1billion being withdrawn from pensions ahead of the 2024 and 2025 budgets.
Summersgill said: ‘It’s just frustrating. Our results show how well the industry is growing at present but the policy formation is sub-optimal.
Rachel Reeves slashed the cash Isa allowance at the last Budget but has not clarified rules on cash held in stocks and shares Isas
‘The reason that we focus on simplicity is because we know that complexity and people’s lack of confidence – they are the biggest barriers to first-time investors taking that step into the world of retail investing.
‘If that is the objective… you need to make sure that policy formation is focused on simplicity to remove the barriers that those first-time investors see.
‘However, the reality of the kinds of policy proposals that we’re seeing is completely the opposite.’
And referring to the tax changes being proposed for stocks and shares ISAs, he said: ‘If they’re a first time investor they have to put cash in the product to begin – by definition they do not have any other investments to put in so they have to start with cash.
‘If you are going to levy a tax charge against a stocks and shares ISA that’s a pretty poor initial experience for the first-time investor – they take out this ISA account that’s supposed to be tax-advantaged and their first experience is they get a tax charge.’
Summersgill said the proposal that surfaced after the Budget had not been confirmed.
But he added: ‘We’ve not had any clarity from the Treasury about how they are looking to take that forward. It’s a problem in the industry that needs to be addressed.’
The comments came as AJ Bell reported a 19 per cent rise in revenues to £183million and a 15 per cent jump in profits to £79m for the six months to the end of March.
Customer numbers grew by 79,000 in the period to reach 723,000 while assets under management climbed 5 per cent to £108.7billion driven by record inflows of £4.2billion and a ‘favourable’ market performance.
The group said it now expects full-year results to be better than previously guided.
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