ISA savings surge to record high

A record £57billion was stashed in ISAs in 2012/13, indicating that the rise in allowances from 2008-09 has worked in attracting more people to such tax-free savings vehicles.

According to an update from HM Revenue & Customs, adult ISAs in 2012/13 sheltered the most funds away from the department since the accounts were introduced in 1999.

Subscription limits rising, as they have done every year since 2008/09, are “likely” to have contributed to the record savings level, which was 9% up on the amount saved in 2011-12.

HMRC also said that since the limits rose, larger increases have been recorded in the average subscription – now standing at £3,501 for cash ISAs and £5,629 for stocks and shares ISAs.

Annual limits for both accounts will increase to a combined maximum of £15,000 a year from July, thanks to reforms in George Osborne’s 2014 Budget, unveiled in March.

The boost will give further scope to save to the 14.6million adults who are subscribed to ISAs which, despite falling interest rates, are still most likely to be for cash, not stocks and shares.

The HMRC update adds that the median ISA holder (by income) has annual income of between £10,000 and £19,000, with ISA savings averaging around £15,830.

Interestingly, the likelihood of having an ISA declines as a person’s earnings rises, but any ISA saving is more – an average of £48,340 among those with incomes of £150,000 or above.

Such savers may stay in the adult ISA market (valued at £443bn) but can invest in Junior ISAs, of which 295,000 were subscribed to in 2012-13, the first year since their launch.

 

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