Platform IG has called for cash ISAs to be closed and replaced with a £1,000 investment grant for every UK-born child, arguing the shift would better support long-term financial resilience. Existing balances would remain tax-free but no new fresh deposits would be allowed.
IG’s modelling suggests that ending new cash ISA subscriptions from April 2027 could raise up to £610m a year by 2032-33.
That additional revenue could cover the £700m annual cost of giving each newborn £1,000 to invest through a Junior ISA in a diversified fund, IG suggested.
Michael Healy, chief executive of IG Consumer, said: “We need to think more radically about how we get people into investing and get them investing more.
“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.”
The analysis is based on Bank of England data showing households added £48bn net to cash ISAs in 2024-25. IG has assumed that 51% of this would instead move into taxable savings accounts if cash ISAs were abolished, applying an effective 17% tax rate and modelling savings rates easing from 3.5% to 3.25%.
IG argued that the continued dominance of cash ISAs highlights the failure of recent efforts to encourage more investing, as cash ISA subscriptions rose by £26.1bn in 2024-25 compared with a £6.1bn rise in stocks and shares ISA subscriptions.
Alongside its ISA proposals, IG warned against raising Capital Gains Tax (CGT), citing earlier analysis suggesting that equalising CGT with income tax could reduce annual revenues by around £7.8bn and adding that it could deter investors from selling assets, reducing taxable disposals and ultimately lowering receipts.
“A fiscally illiterate increase in CGT could discourage investment at precisely the moment we need to be encouraging it,” Healy said.