Trading platform IG is calling for a radical rethink of how the government drives financial resilience, including scrapping the cash ISA and providing an investment grant for every UK-born child.
With just a few weeks to go until the Autumn Budget, IG has urged the government to think much more radically about how it can get people to invest and get them investing more.
The firm’s modelling suggests that closing cash ISAs to new contributions from April 2027 could raise up to £610 million a year by 2032/33. According to IG, this additional revenue should be used to fund the annual cost of giving every UK-born child £1,000 to invest in a junior ISA. The proposal does not involve existing cash ISA balances.
Despite a government push to create a greater investing culture in the UK, cash ISA contributions continue to dwarf growth in stocks and shares ISAs. Cash ISA subscriptions increased by £26.1 billion in 2024/25, up 37.5% year-on-year, compared with a £6.1 billion increase in stocks and shares ISA subscriptions. Cash accounted for 64% of all adult ISA accounts subscribed to during the year.
IG argues that the gulf between money going into cash ISAs and stocks and shares ISAs highlights the need for a more fundamental shift in incentives if the government is serious about creating an investing culture.
Alongside stopping cash ISA contributions, IG also proposes giving a £1,000 investment grant to every UK-born child invested through a Junior ISA in a diversified fund rather than held in cash. At current birth rates, around 700,000 children would become investors every year, with the scheme costing the Exchequer around £700 million a year.
Michael Healy, CEO of IG Consumer, said: “We need to think much more radically about how we get people into investing and get them investing more. For decades, we have built a culture around saving cash. If we want households to build greater financial resilience, we need to make investing a normal part of life.
“Our modelling shows that phasing out cash ISAs could ultimately generate hundreds of millions of pounds a year – enough to cover most of the annual cost of giving every UK-born child £1,000 to invest.
“Giving every child £1,000 to invest from birth would be a powerful way to normalise investing, with 18 years of compounding growth delivering the investing message in a way that politicians could never manage.”
Additionally, IG is urging the government not to implement a “fiscally illiterate” increase to capital gains tax. Previous analysis by the firm found that equalising CGT rates with income tax would reduce revenues by around £7.8 billion a year, as higher rates could discourage investors from selling assets, reducing taxable disposals and ultimately lowering tax receipts.
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