The number of people using ISAs has fallen to the lowest level since 2000, but the amount saved increased year-on-year to almost £70bn, according to latest governmental figures.
A total of 166,000 people used the Lifetime ISA in the first year.
AJ Bell personal finance analyst Laura Suter commented: “The number of people saving into an ISA has fallen for another year, taking the total number of ISA accounts to its lowest level since the 1999-00 tax year. This comes after a similar drop the previous year, with an almost 13% fall in the number of ISAs opened.
“However, the amount of money saved into ISA accounts in 2017-18 has actually increased in the past year, to £69.3bn – so fewer people are using the accounts but those that do are saving more. This is a surprise turnaround following a 23% fall in the amount of money saved within an ISA between 2016-16 and 2016-17 – although remains below 2015-16’s figures.
“The majority (72%) remains in cash ISAs. At the paltry interest rates being offered by many banks and building societies, coupled with currently high inflation, the bulk of this money is likely losing spending power in real terms."
Suter said the effect of the personal savings allowance, which launched in 2016 and gives £1,000 of interest tax-free for basic-rate taxpayers or £500 for higher-rate taxpayers, is continuing to diminish the appeal of ISAs for savers.
Junior ISAs are continuing to be largely invested in cash.
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