Chancellor Jeremy Hunt expected to revamp ISAs at Autumn Statement 2023

Jeremy Hunt is being tipped to revamp Individual Savings Accounts at Autumn Statement 2023.

The chancellor will use his November 22nd statement to streamline the UK’s “array of ISA products”, the Financial Times reported.

Mr Hunt was called by Freelancer Financials to use his inaugural Budget in the spring to reform the Lifetime Individual Savings Account, to “modernise how contractors save.”

'Single ISA'

The call by the contractor mortgage broker was indirectly echoed in May this year, when AJ Bell said that to “eradicate complexity,” the UK’s six ISAs should be reduced to just one.

Such streamlining is more aligned with what Mr Hunt is reportedly now considering -- “enabling cash savings and stock market investments to be held in a single ISA,” among other ISA simplification ideas, the FT reported.

But the chancellor’s motivation to revamp ISAs doesn’t appear to have anything to do with what Freelancer Financials CEO John Yerou has criticised as a “disconnect” between the objectives of an ISA and the objectives of savers.

Rather, Mr Hunt’s focus is said to be on encouraging more usage of the tax-free savings accounts as a way to back London-listed companies.

'Surprised if self-employed get anything from Autumn Statement 2023'

That contractors, or even just contractor saving, isn’t on the chancellor’s mind won’t surprise a former tax officer, who spoke about Autumn Statement’s likely contents just before the ISA detail emerged.

“I’d be surprised if there was anything of value for, or even interest to the self-employed community in Hunt’s November package,” Carolyn Walsh, who previously inspected for the Revenue, told ContractorUK. 

“HMRC said, and followed through with increased revenue from IR35 reform, which largely came from contractors working via agencies being switched to umbrella companies.

“Note, it didn’t come from increased compliance which was the alleged aim of the reform. We all know that, but the government is oblivious or doesn’t care.

“Similarly, it’s this government’s opinion that business-owners will create wealth in a ‘sympathetic economy,’ so [Hunt] won’t be looking at any further measure which will support contractors, their finances or their companies, given [he] doesn’t think [anything is] actually needed.”

'More extreme desires'

Another veteran tax adviser to the contractor sector came across as unmoved when told last night that ISAs could be the chancellor’s showpiece on November 22nd.

“For Autumn Statement 2023, I have to say my desires are a bit more extreme -- like deleting or at least moderating the MSC legislation,” said the adviser, Anthony Mellor who writes today exclusively for ContractorUK.

The founder of Mellor & Co continued: “From what I’ve seen this year, this legislation is now being abused by HMRC. It was designed for, and succeeded in, taking down half a dozen service provider’s specific services.

“It was not designed to be used against ‘ordinary’ taxpayers, or to in reality deprive these ordinary taxpayers operating as contractors of professional services access and advice. The MSC legislation is far far too vague, [partly hinging on] words like ‘involvement.’”

'Super-cautious'

But if root-and-branch reform of the Managed Service Company regulations is too bold, but transforming ISAs might not be, Number 10 and Number 11’s guiding principle could be to tax-tweak in a measured way, which appeals to their traditional voters.

“Perhaps the only reason we see this pair as ‘super-cautious’ is because of their immediate predecessors,” suggested HMRC dispute expert Graham Webber, under an online photo of Hunt and prime minister Rishi Sunak but referring to former chancellor Kwasi Kwarteng and former PM Liz Truss.

Tax director at WTT Consulting, Mr Webber added: “[But] do lower taxes [which was the thrust of the two predecessors’ mini-Budget], create the wealth Britain needs? Perhaps, but first they line the pockets of those who already have most -- and make those who have least, worse off.”  

Yesterday, mainstream media reports that Mr Sunak is looking at a cut to inheritance tax were dismissed by government minister Grant Shapps as “speculation”, even though Shapps called IHT, which only affects a small minority of the population, “punitive and unfair.”