In today’s Spring Statement, the Chancellor called for a government that supports the ambition of British businesses and unleashes the next wave of investors and discoverers. Octopus Investments shares this ambition, and is calling on the government to open up the Individual Savings Account market by allowing people to invest in unlisted companies, and the entrepreneurs behind them, through their Stocks and Shares ISAs.
The Chancellor stated that boosting UK productivity, which remains key to unlocking higher living standards and raising long-term growth, will create an increasingly thriving economy. One of the ways in which this could be done is by releasing the £315 billion1 currently held in Stocks and Shares ISAs. If just 1% of this capital was invested in small, unlisted companies, it would unlock more than £3 billion of extra investment for some of the UK’s most entrepreneurial, high growth small businesses (HGSBs) which are major contributors to our local and national economic growth.
Such a reform would not only improve access to capital for these businesses, but it would also allow more investors to access the potential growth of these companies at the smallest end of the market.
Paul Latham, Managing Director of Octopus Investments, says:
“HGSBs form a crucial pillar of the UK economy, but it has been a tricky sector for investors to access, with many investment portfolios under-weight in smaller companies. By enabling investors to support UK entrepreneurship through their ISAs, we would improve access to capital for fast-growing businesses, particularly those that have exceeded the VCT investment limits. The UK has one of the best funding environments for SMEs in the world, but we think there is still more that can be done to channel large pools of existing capital to businesses looking to scale up.
“The legislation required to achieve this would be straightforward to implement, and some of the existing anti-avoidance legislation employed for Self-Invested Personal Pensions (SIPPs) could be borrowed to prevent special purpose vehicles from qualifying”.
Chris Hulatt, co-founder of Octopus Group, commented:
“At Octopus we see first-hand the benefits that high growth small businesses deliver to our economy, not least through the thousands of jobs they create across the country. The Government’s decision to enable AIM shares to be held within an ISA wrapper has been a significant success story. There is now a real opportunity to build on this and for ISAs to play a meaningful role in supporting the next generation of UK business.”
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Notes to Editors
 HM Revenue & Customs Individual Savings Account (ISA) Statistics – August 2017
For journalists in their professional capacity only. The value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. Tax treatment depends on individual circumstances and may change in the future. Tax reliefs depend on the portfolio companies maintaining their qualifying status. The shares of the smaller companies we invest in could fall or rise in value more than shares listed on the main market of the London Stock Exchange. They may also be harder to sell. Personal opinions may change and should not be seen as advice or a recommendation. We do not offer investment or tax advice. We recommend investors seek professional advice before deciding to invest. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 03942880. We record telephone calls. Issued: March 2018.