Bridging the wealth divide? Examining the role of Stocks and Shares ISAs in reducing wealth inequality in the UK

This research examines whether Stocks and Shares Individual Savings Accounts (S&S ISAs) in the United Kingdom democratise wealth accumulation or reinforce existing socioeconomic disparities. Using longitudinal data from the Wealth and Asset Survey (2006-2020), the study employs multiple analytical approaches, with propensity score matching providing the most credible causal estimates. The findings reveal three key patterns: First, S&S ISA ownership is associated with approximately 27% higher wealth growth compared to similar non-owners. Second, adopting an S&S ISA generates substantial wealth benefits (227% for new adopters) that persist even after abandonment, with former ISA holders showing no significant disadvantage compared to never-owners. Third, contrary to expectations, S&S ISAs provide greater relative benefits for individuals without higher education, challenging assumptions that tax-efficient investment vehicles primarily benefit the already-advantaged. These results suggest that S&S ISAs can function as effective wealth-building tools with democratising potential if barriers to initial adoption among disadvantaged groups can be addressed. The study contributes to literature on wealth inequality and asset-based welfare by providing empirical evidence on the distributional effects of investment-based policy instruments within a liberal welfare regime.