AAT’s ISA recommendations to the Chancellor

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Ahead of Chancellor of the Chancellor’s Spring Statement tomorrow, AAT CEO Mark Farrar has written a letter to address key concerns.

Farrar calls for a review of ISAs, which will eliminate the complexity of the various saving accounts. The end result, “Everything ISA”.

See his full letter below:

Dear Mr Hammond,

Individual Savings Accounts (ISAs) used to be a relatively simple, tax efficient savings vehicle. They were widely understood by the general public and proved attractive in encouraging people to save either in cash or shares, or indeed both.

Unfortunately, this is no longer the case. There is now an ISA for every day of the week, offering unnecessary complexity, bureaucracy and confusion for consumers.

The introduction of more and more ISAs, the fact they interact poorly with each other, have a variety of different savings limits as well as different rules and requirements has made the ISA savings landscape far from clear. It is now difficult for many to understand and thus acts as a disincentive rather than an incentive to save. 

As a result, the Association of Accounting Technicians (AAT) contended that the original objectives of each ISA needed to be carefully reviewed, that simplification to encourage greater levels of saving was required and that serious thought should be given to returning to a tax-free savings landscape that offers simple ISAs rather than unnecessary complexity.

With this in mind we established a cross-party working group, including Sir Graham Brady, Chris Leslie and Kirsty Blackman as well as members of the savings industry, accountancy profession and a personal finance journalist.

The result of this nine-month project is the enclosed AAT ISA Working Group report, ‘Time for change: a review of the ISA regime’, which makes a number of considered recommendations for reform.

These recommendations include removing the ISA name from the Help to Buy scheme, closing the Lifetime ISA to new entrants and folding all remaining ISAs into a single, simple, easily accessible “Everything ISA”. 

The report includes a variety of recommendations that should increase both the number of people saving and the amount being saved as a result of creating a new “Everything ISA”. These include:

  • Establishing an “Everything ISA” when a baby’s birth is registered, ensuring future generations are encouraged to save
  • When opening any savings account, a tick-box option stating “Add this to your ISA?” should be provided, further increasing awareness and consideration of saving in an ISA amongst adults
  • An “Everything ISA” dashboard should be created so that savers can see all their ISA savings products in a single location
  • The annual savings limits should be scrapped in favour of a £1m lifetime contributions allowance

The response to publication of the report last week has been overwhelmingly positive, from policymakers, stakeholders, the savings industry, media and the public. In fact, there hasn’t been a single negative comment made about the recommendations we have made which is further evidence of the fact this is a very thoroughly considered, credible and thought-provoking report.

I know that savings policy is kept under constant review and would therefore be grateful if you would give serious consideration to adopting the Everything ISA as recommended in the report.

Please do not hesitate to contact me should you have any queries or require any further information.

Yours sincerely, 

Mark Farrar

Chief Executive

Mark Farrar is the Chief Executive of AAT.

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