The number of ISA millionaires in the UK hit a record high, as more Brits chose to plough their cash into the tax-shielded account.
The total number of stocks and shares ISA millionaires increased by more than 50 per cent in the 2023/24 tax year, reaching a record 7,730 according to an FOI request from financial app Plum to HMRC.
This marked a further 2,660 Brits holding £1m or more in their ISA accounts, up from 5,070 in the 2022/23 tax year, and represented the largest year-on-year increase since 2016.
According to HMRC data, the average ISA millionaire was holding a pot worth roughly £1.3m in April 2024.
Around 60 savvy savers had pots worth around £4m, while the top 25 investors had accounts averaging an eye-watering £11.9m.
Patient investors
Stocks and shares ISA allows individuals to invest in the stock market without paying tax on profits. The product has grown in popularity in recent years as both the government and financial industry have raised awareness of the benefits of moving away from cash savings.
“These aren’t people who suddenly saved their way to £1m. It’s the result of years of patient investing, where the growth on your growth starts doing the heavy lifting. That’s the bit people underestimate,” said Will Bryant, director of wealth strategy at Plum.
“These figures underline the value of investing and the importance of taking a long-term approach. Despite the geopolitical volatility of recent years, global markets powered by the U.S. stock market have continued to climb.”
Tax system upheaval
Bryant also pointed towards the benefit of allocating capital into an ISA as families brace for pensions to be pulled into the scope of inheritance tax (IHT) from April 2027.
ISA pots remain exempt from IHT if passed onto a spouse or civil partner.
The cash ISA ceiling is also set to be slashed from £20,000 to £12,000 from the next financial year, while the stocks and shares ceiling is set to remain at £20,000 in a bid to get more people to opt to save into the product.
Bryant said: “The ISA reforms may lead people to use more of their stocks & shares ISA to make full use of their tax-free allowance.”
Figures released by HMRC in September showed around £135.7 billion was subscribed to adult ISAs in the tax year 2024/25, a £32.7 billion annual increase.