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The government has launched a consultation for changing the Individual Savings Account (ISA) rules in order to expand the range eligible to be held in a stocks and shares ISA and qualify for tax reliefs, reports Chartered Accountants Northampton Harris & Co.

The closing date for consultation is 8 May 2013.

Under the proposals, company shares traded on a wider range of equity markets will be eligible for a stocks and shares ISA, including markets with a component of smaller company shares.

This means that from April , investors will be able to put their full annual ISA allowance - currently £11,280 - into a range of shares, and pay no further tax on gains or income..

In addition, shares on Britain’s junior market will continue to earn an inheritance tax exemption after being held for two years, and qualify for inclusion in existing tax-friendly vehicles such as venture capital trusts and enterprise investment schemes.

Economic Secretary to the Treasury, Sajid Javid, said: ‘Access to finance for smaller growing companies is key to promoting private investment and delivering a sustainable economic recovery. The Government wants to ensure that businesses, particularly small businesses, are able to access finance and support, and this change has the potential to help provide that access while offering consumers greater choice in what they can hold in their ISA. ‘

The proposal was first outlined at the 2012 Autumn Statement with the aim of encouraging more investment in growing businesses.

The government expects to publish draft regulations to lay before Parliament by the summer.

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