Is it time to review your ISA savings?
3rd March 2020
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About 1,000 people in the United Kingdom are estimated to be ISA millionaires1, the funds in their ISA portfolios protected from any further liability to Income Tax and Capital Gains Tax. If you had used your full ISA allowance every year, by now you would have invested nearly £230,000, or twice this figure for a couple.  It’s a healthy sum, but it would still have to have been invested wisely to achieve that magic figure.

Since Chancellor Gordon Brown introduced them in 1999, to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs), ISAs have proved a very popular way to save and invest. Latest figures show that a total of £608 billion is held in ISAs.2 Given these figures are a couple of years old, the value of ISA investments is likely to be considerably higher now.

About 1,000 people in the United Kingdom are estimated to be ISA millionaires

Given that over 21 million people have an ISA3, however, it might seem surprising that there aren’t more ISA millionaires in the UK. One explanation is that relatively few savers have consistently used their full ISA allowance, which for this tax year is £20,000, or £40,000 for a couple. For instance, in 2016/17, only 20% of savers used their full annual ISA allowance, while the average subscription was £6,400.4


Of course, not everyone can afford to take advantage of the full ISA allowance. Not surprisingly, there is a correlation between ISA contributions and the individual subscriber’s income. For instance, among those whose annual income was between £100,000 and £149,999, 43% used the full ISA allowance. In contrast, of those ISA savers earning between £30,000 and £49,999, one in five maximised their subscription.5


Is cash the right place?


Higher-income groups are also more likely to invest in stocks and shares, rather than cash, compared with those on lower incomes. ISA millionaires tend to have allocated at least 90% of their portfolio to stocks and shares, with an average of only 7% held in cash.6


It’s no coincidence that so many ISA millionaires have chosen to invest more in stocks and shares. Cash returns have been near record lows for the last decade; in other words, half the period since ISAs were introduced.


For example, the average return on an easy access Cash ISA is currently just 0.83%.With inflation running at 1.8%, it’s easier to see why many Cash ISA savers could actually be receiving negative interest in real terms. Bearing in mind that ISAs were designed to encourage tax-efficient investing, it's clear that cash may not be king when it comes to making the most of your ISA benefits.


Even so, four out of five ISA subscriptions since 1999 have been into Cash ISAs. Yet, despite this popularity, Cash ISAs make up only 44% of the total market value of all ISAs.8 Stocks & Shares ISAs have created considerably more wealth for investors over the years, despite the fact that only one in five subscribers have invested in them.


“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.”  Robert G. Allen, US businessman and member of the House of Representative


How to make the most of your tax benefits


Becoming an ISA millionaire might seem a distant prospect for many of us, but that doesn’t mean we shouldn’t ensure the ISA savings we have accumulated are working as hard for us as possible.

While you should make the maximum possible use of your allowance each tax year, looking after the money you’ve already saved in ISAs is just as important. The end of the tax year is an ideal opportunity to do that, to assess whether your ISAs are on track to provide the funds you need in the future.


Here are the questions you should consider.

Cash ISAs

  • When did you last review whether the amount you’re holding in cash is right for you?
  • If you have held money in a Cash ISA for more than five years, then cash has become part of your long-term investment strategy? Is that a good idea?
  • Do you know what rate of interest you’re getting?


Stocks & Shares ISAs

  • When did you last check how your investments are performing?
  • Does your ISA portfolio still match your attitude to risk: are you taking more risk than you are aware of, or comfortable with?
  • Is your ISA portfolio on track to meet your objectives?


Getting help to undertake a review is the first step in giving you the best chance of maximising the tax benefits of your ISA savings.


To receive a complimentary guide covering Wealth Management, Retirement Planning or Inheritance Tax Planning, produced by St. James’s Place Wealth Management, contact Nick Jones on 01743 240968, by email or visit


The Partner Practice is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website The title ‘Partner Practice’ is the marketing term used to describe St. James’s Place representatives. 


The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select, and the value can therefore go down as well as up. You may get back less than you invested.


An investment in a Stocks & Shares ISA will not provide the security of capital associated with a Cash ISA.


The favourable tax treatment given to ISAs may not be maintained in the future as they are subject to changes in legislation.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.


Drip feeding your investment does not guarantee you a higher return than making a one off payment. 


1,6 Moneywise, February 2018


2,3,4,5,8 HMRC, Individual Savings Account (ISA) statistics, April 2019


7 Moneyfacts, February 2020


About the Author

Mark Luckman

Member since: 10th July 2012

I champion the best businesses in Telford and Wrekin, businesses recommended by you. If you run a local business or know a really great local business that you think deserves to be known by more local...

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