29th August 2014
The introduction of a super-sized ISA and pitiful cash savings rates led to record subscriptions to stocks and shares ISAs.
A record £18.439 billion was invested into stocks and shares ISAs in the 2012/13 tax year, according to the latest figures from the Office of National Statistics (ONS).
This figure has increased from £16.459 billion the previous year and takes total ISA assets, for both stocks and shares ISAs and cash ISAs, to £460 billion – up from £442.8 billion the previous year.
However, the total number of ISAs opened between April 2013 and April 2014 has fallen for the first time since 2011 as fewer people save into cash accounts. The number of ISAs fell 8% from 14.6 million last year to 13.5 million.
The number of ISAs may have dropped but savers are putting away more money. The average amount invested in a cash ISA rose from £3,501 last year to £3,704 this year and the amount saved into stocks and shares ISAs increased from £5,629 to £6,163 over the same period.
Danny Cox, head of financial planning at Hargreaves Lansdown, said the introduction of the New ISA allowance of £15,000 and increasing confidence in stockmarkets had boosted stocks and shares ISA subscriptions.
‘The combination of low cash ISA rates, improved confidence in the markets and a higher ISA allowance has boosted stocks and shares ISAs to a record year of investment. It is unsurprising that subscriptions to cash ISA accounts were down given the drop off in interest rates. The increase in average subscriptions to record levels shows the importance UK savers and investors put on tax-free ISAs.’
Figures released by the Bank of England earlier this week showed the rate on cash ISAs has fallen dramatically since 2012 and the introduction of the Funding for Lending scheme.
Cash ISAs offering a bonus paid an average rate of 2.57%% in July 2012 but today pay just 1.18% on average – a fall of 54%. For cash ISAs not paying bonuses the rate has fallen 39% from 1.41% to 0.86% over the same time.
You can save up to £15,000 tax-free in an ISA following the new rules brought in after the Budget. The £15,000 can be split any way you want with 100% in cash, 100% in stocks and share or a mixture of your choosing.
Hargreaves Lansdown said the top 10 funds that investors are putting their stocks and shares ISA saving into are:
1. Artemis Income
2. First State Asia Pacific Leaders
3. HL MM Balanced Managed Growth
4. HL MM Income and Growth
5. Lindsell Train Global Equity
6. Marlborough Multi-Cap Income
7. Newton Asian Income
8. Royal London Sterling Extra Yield Bond
9. Threadneedle UK Equity Income
10. Woodford Equity Income