Proactive Investors - British individual savings accounts (ISA) could pump up to £4 billion into UK companies each year, Peel Hunt (LON:PEEL) analysts have said.
Having been introduced by chancellor Jeremy Hunt in April’s Spring Budget, Peel Hunt said a boost could indeed be dealt to British companies if many switched from other accounts.
This is if the majority of those who max out stocks and shares ISAs did the same with the British-focused alternative, alongside almost a third of those fully utilising cash ISAs.
Jeremy Hunt had introduced the British ISA in a bid to incentivise investment in UK-listed companies, with such accounts offering an extra £5,000 tax free allowance at £25,000.
“The UK equity market has a systematic issue, with negative fund flows driving low valuations,” Peel Hunt said.
“A UK ISA is not a silver bullet, but an important element in resuscitating the equity market.”
Peel Hunt warned the British ISA may need to include further incentives to be successful though.
This includes allowing investment in all companies with a UK-listing, rather than basing choices on where firms are headed, according to the bank.
Exclusion from inheritance tax could also boost use of the British ISA, Peel Hunt suggested, alongside ensuring there is no market cap limit on companies included.