The vast majority (94%) of ISAs with a market value of at least £1m are stock and shares accounts, according to new figures obtained from HMRC by Murphy Wealth.

A response to a Freedom of Information (FoI) request submitted by the wealth manager found that of the 4,850 individuals with £1m or more in their ISAs during the 2021/22 tax year, which was the latest available data, 4,560 of them had stock and shares accounts.

The remaining 290 individuals holding ISAs with a market value of at least £1m had a combination of cash and stocks and shares ISAs which reached or exceeded that value together.

According to HMRC’s figures, there were 3.93 million stocks and shares accounts in the 2021/22 tax year, compared to 7.14 million cash accounts.

“While unsurprising, these figures from HMRC are revealing,” commented CEO of Murphy Wealth CEO, Adrian Murphy. “Almost all ISA millionaires have built their wealth by holding stocks and shares – and no one has got to that status holding cash alone. It only serves to underline why more people in the UK should consider investing their money.

“There is a popular perception that the stock market is too risky and holding cash is the safe option. But the reality is quite different. Historically, a balanced portfolio of stocks and shares has delivered far higher returns over most reasonable timeframes, while cash savings have often failed to beat inflation.”

Murphy Wealth’s FoI follows separate HMRC data showing that in the 2023/24 tax year, the number of cash ISAs had risen to 9.94 million – up 2.1 million on the previous 12 months. Meanwhile, the number of stocks and shares accounts only increased by 283,000, to 4.09 million.

Despite stocks and shares now having only a 27% share of all ISAs, they still represent 59% of the total market value of accounts, at £511bn compared to £360bn for cash. That means the average value of stocks and shares accounts was nearly four times greater than cash ISAs – £124,939 compared to £33,217.

“Even during periods like the last couple of years when interest rates on cash ISAs have been optically high, many of them default to a lower rate after a year or two,” Murphy added. “Given how stubborn inflation has proven, an increasing number of cash accounts are failing to keep up with the rising cost of living.

“Using your ISA annual subscription to save cash is a waste of the allowance – and the figures we have uncovered from HMRC demonstrate why the Chancellor is right to look at reforming ISAs in a way that better incentivises investment.”

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