The Government wants company shares traded on the wider equity markets to be eligible for a stocks and shares Isa. This would include markets with a component of smaller company shares.
It is hoped this will bring in capital for small to medium-sized enterprises and encourage more investment in growing businesses.
The changes were first proposed in the Autumn Statement last December.
The stocks and shares Isa limit is £11,280 although this will rise in April to £11,520.
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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."
Giles Hargreave, chief executive of Hargreave Hale, said: "There's talk of AIM shares being able to be held in Isas. I hope this is the case as it's irritating not to have the tax protection in Isas for AIM shares. It would also bring more money into the sector."
Questions on the consultation include which equity markets should become eligible, whether the rules should apply to Junior Isas, what are the risks and what safeguards should be put in place. The consultation will run until 8 May 2013.
Click here to view the consultation paper http://www.hm-treasury.gov.uk/consult_isa_qualifying_investments.htm 

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