Attention has turned to wealth taxes in the run up to the General Election, with a new poll revealing that 11% of people would be more likely to vote for a party that pledged to cut tax on investments.
According to the findings from an Opinium survey of 2,000 people, 31% of investors think a Conservative government would be better for their investments, while 27% think Labour would, while 23% are unsure.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “There was much discussion as to whether or not Labour would introduce new wealth taxes. Coming on the back of the Conservative’s cuts to the dividend tax and capital gains tax thresholds, both effectively raising wealth taxes, some of this speculation could sound the alarm bell for investors. It doesn’t just raise concerns for the super rich, but for people with defined contribution pensions or those who are putting money away to help protect them later in life.”
Both parties have pledged to forge ahead with the British ISA, with a consultation on the new product due to close on Thursday. In addition to the British ISA, Conservative ISA reforms have focused on improving digital reporting which should make it easier to transfer ISAs, while Labour has said its focus is upon simplifying the ISA regime, encouraging more use of stocks and shares ISA and a campaign for retail ownership.
Streeter said: “There’s still a long way to go before a UK-focused tax wrapper would be implemented and many more discussions to be had on the best ways to encourage UK investment. Retail investors are already enthusiastic backers of British equities. An ISA is the first product people look to for their savings and investment. Any changes to the ISA regime should be focused on simplifying it and encouraging more investment.”
Hargreaves Lansdown has called upon the government to make “targeted changes” to the Lifetime ISA to make it more attractive for self-employed people to save for the long term, including raising the maximum age for opening and contributing to 55. In addition, the investment platform says there should be greater consideration given to where in the investment process risk warnings are given.
“By focusing on the outcomes and how people respond, and ensuring risks are understood, it could mitigate the risk of putting investors off by presenting risk warnings early and often. A similar approach could be used in reviewing the prospectus regime,” said Streeter.
Finally, Hargreaves Lansdown has urged the government to implement the outcome of the Hill and Austin reviews, so that companies have to consider retail investor participation in capital raising and justify any exclusions. The firm said that between 1996 and 2020, its clients were excluded from 88% of all primary market transactions.
“There is still a need to allow for investment into long term asset funds from within a stocks and shares ISA, giving people appropriate access to private assets and infrastructure investments. This would be a valuable step forward to once a Chancellor is installed in Number 11, we want this to remain firmly on their to-do list,” Streeter added.
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