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Savers would be handed an extra £5,000 Isa allowance if they put money into a “Great British Isa” under plans to boost the economy.
Jeremy Hunt is actively considering proposals to introduce an additional £5,000 allowance for savers who want to invest in UK-listed companies, The Telegraph understands.
Sources familiar with Mr Hunt’s thinking also said he is considering introducing a new stocks Isa that can only be invested in UK companies’ shares.
Proposals for a new UK-only Isa would incentivise tax-free investment in businesses listed on the London Stock Exchange, providing a much-needed capital boost to the main UK stock market, supporters of the proposals have said.
It follows a letter to The Times calling for such reforms, signed by City figures including former pensions minister Baroness Altmann and the bosses of high-profile investment groups such as Panmure Gordon and Shore Capital.
The letter said: “A major oddity of the present Isa regime is that it offers the same incentives for savers to invest in overseas as domestic businesses.”
Creating a Great British Isa would “drive interest from a wider pool of investors and create a multiplier effect, reviving interest in raising equity in the UK, driving economic growth, spreading prosperity and boosting tax revenues”, it added.
The letter comes a week before the Chancellor’s Autumn Statement, in which Mr Hunt is expected to maintain current high levels of taxation despite widespread calls to ease the nation’s burden.
However, sources familiar with Mr Hunt’s thinking suggested that fuel duty will not be increased next week.
The Chancellor is expected to unveil a package of Isa reforms including the ability to open multiple Isas of the same type in the same tax year without losing the tax-free allowance.
Isas currently allow savers to shelter up to £20,000 a year from the taxman, with the allowance applying to both the savings in the product and the interest it yields.
Currently the allowance only applies to one Isa of each available type: cash; stocks and shares; lifetime; and innovative finance.
Premier Miton chief executive Mike O’Shea first floated the idea of a UK-only stocks Isa in The Telegraph in September.
Around £67bn is currently invested in 11.8 million Isas across the country. According to HM Revenue and Customs, the value of funds held in stocks and shares Isas increased 14pc during 2021-22.
Calls to simplify Isas have gathered pace in recent months, including by potentially merging cash and stocks Isas into one product.
Prominent companies have repeatedly warned that London is becoming a less attractive destination for investors following a string of high-profile initial public offering flops and a recent trend for companies to de-list from the London Stock Exchange in favour of US stock markets.
Last month, London overtook Paris as the largest stock market in Europe, with the market value of stocks traded in the capital overtaking those of the French bourse.
Confidence in the London market has as economic malaise and political uncertainty have pushed international investors to look elsewhere.