Mike O'Shea, chief executive of Premier Miton Investors, said policy makers should create a new ISA with a more generous annual allowance. Credit: LinkedIn
The city's leading fund manager called for a «Great British Isa» to encourage savers to invest and boost the economy.
Mike O'Shea, chief executive of Premier Miton Investors, said policy makers should create a new ISA with a more generous £25,000 annual allowance, £5,000 more than the current allowance, which can only be invested in UK stocks.
He said the move would increase the incentive for savers to invest their money in the stock markets, theoretically boosting long-term returns, as well as increasing capital inflows into UK businesses.
< p>He added: «This offer will have the same legal and regulatory framework as Isa's existing products and can be readily available at all fund supermarkets with minimal regulatory changes.
«If the UK government intends to provide depositors tax-exempt as a means of investing in the UK, we should certainly also encourage UK savers to consider investing these savings in UK domestic growth businesses.”
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This comes after The Telegraph reported last week that savers would be forced to invest in stocks and shares due to the shake-up of the Isa regime being considered by the Treasury.
Ias allows savers to save up to £1. 20,000 per year without having to pay tax on interest or income. Contributors can invest in funds or stocks, or receive a simple savings rate from a provider.
Ministers are supposed to be weighing the simplification of the Isa due to concerns that not enough savers are putting their money into stocks and equities, with data from the financial regulator showing that only 10% of Isa savers hold money in the stock market, with the majority preferring cash.
It also comes amid fears that London is lagging behind rival financial centers and fast-growing companies are fleeing the UK to list overseas.
2006 The UK is less attractive than the rest of the G7
Mr O'Shea said the Great British Isa could ensure companies have access to the capital they need to encourage them to scale up and go public in the UK. It is estimated that more than £200bn could be raised for listed UK businesses over five years.
He added: «The future of the UK as a place to do business has been discussed a lot in recent years, but the slow path to a dying capital market continues despite everything.»
“We support government reforms in Edinburgh to make the UK a leader in technology and life sciences through early-stage investment in private, non-listed start-ups in technology, innovation and science.
“But focusing on this approach by solving problems in public markets is problematic as it limits exit strategies for these UK companies. This will lead companies to choose to list overseas when they move into the next, more profitable growth phase.”
“With the Great British Isa, we are able to provide British capital to British companies,”
Mike O. &# 39;Shi
The Telegraph reported last week that ministers are enthusiastic about simplifying the IAS and want to encourage savers to invest more in equities. We fully agree. But while we're at it, why don't we make sure that UK businesses are the main beneficiaries of these reforms and have the investment they need to grow here in the UK?
We have a simple suggestion — a small change in the rules Isa, which could result in more than £40 billion of British savers' money being invested annually in UK stocks.
The future of the UK as a place to do business has been discussed a lot in recent years, but the slow path to a dying capital market, no matter what, continues. We support government reforms in Edinburgh to make the UK a leader in technology and life sciences through early-stage investment in private, non-listed start-ups in technology, innovation and science.
But focusing on this approach at the expense of solving problems in public markets is problematic, as it will limit exit strategies for these UK companies. This will result in companies deciding to list overseas as they move into the next, more profitable growth phase. This reduces the value creation opportunities for UK investors.
2305 Share of UK shares held by UK pensions and insurance companies
In essence, giving companies access to the capital they need will incentivize them to scale up and list shares here in the UK. This will mean that the headquarters of the companies and all the high-paying positions, tax revenues and international prestige associated with them will remain here in the UK.
Recent examples of fast-growing domestic companies listed overseas include Flutter Entertainment, the parent company of Paddy Power and Betfair, which recently announced it is seeking an additional listing in New York, and semiconductor developer Arm Holdings, which is now considering an IPO on the Nasdaq, attracted the attention of politicians and raised questions among regulators around the attractiveness of the UK capital markets.
Creating a more liquid market can lower the cost of capital. This, in turn, can add value to companies, which is a key reason why many domestic companies choose to list in New York. It will also help protect the best UK companies from being taken over by foreign buyers who tend to seek bargains in the UK.
So, with so much at stake, what can we do?
We at Premier Miton Investors believe that more UK savings should go to UK companies. Our offering, Great British Isa, will be combined with other existing Isa's and funnel retail investor savings into UK listed shares.
We are calling on policy makers to add another £5,000 to Isa's annual investment permit. exclusively for this account. This amount must be on top of the current annual allowance of £20,000. This proposal will have a similar legal and regulatory framework to existing ISAS standards and can be easily accessed in all fund supermarkets with minimal regulatory changes.
More about ISAS
According to the Financial Conduct Authority, about 8.4 million people who own investment assets worth £10,000 or more hold most or all of those assets in cash. While this suggests some basic assumptions that we should avoid overemphasizing if we were to operate on the basis that these 8.4 million people invested a maximum of £5,000 in the new Great British Isa, in the first year alone for listed UK businesses £42 billion could be raised. — a radical decrease in the cost of capital. If this were repeated within five years, British businesses could benefit from £210bn.
This would be an important step towards supporting a strong UK stock market, which is critical and essential to a healthy economy. , contributing to the creation of skilled jobs and additional productivity. It would also justify higher wages and higher tax levies for the UK government to pay for social benefits such as schools, hospitals, defense and pensions, and most importantly, without tax increases.
If the UK government is committed to providing savers with a tax-free vehicle to invest in the UK, we should certainly also encourage UK savers to consider investing these savings in a UK domestic growth business.
With such significant economic growth Facing the hurdles the UK is facing, we believe UK companies need our help and supporting them to scale and grow will support them and also benefit our communities. We know the government recognizes this, and we hope these proposals will build on the extensive proposals laid out in the chancellor's speech at the mansion earlier this summer.
Such a savings account will unlock the city's full potential, not only scale more small private companies, but to provide those same companies with an attractive listing environment so they can stay and grow here in the UK. With cross-party political will, we can increase the liquidity of capital offered to UK businesses and make the UK listing regime the global capital of capital.
Mike O'Shi — Chief Executive of Premier Miton Investors
Mike O'Shi — Chief Executive of Premier Miton Investors
Mike O'Shi — Executive Director of Premier Miton Investors
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