The total number of ISAs has increased to the highest level for 13 years, new figures released by HMRC have shown.

An estimated 15 million ISA accounts were subscribed to in 2023/24, the latest HMRC data available has shown, which marks the highest level since 2010/11 when there were 15.2 million accounts. The figure was also a significant uptake from 12.4 million accounts in 2022/23.

HMRC’s latest figures revealed that around £103bn was subscribed to adult ISAs in 2023/24, a jump worth £31.4bn on 2022/23.

The rise was driven by a significant increase in cash ISA subscriptions, which grew by 67% year-on-year to surge by £27.9bn. By comparison, stocks and shares ISA subscriptions followed with a 10.9% increase (£3.1bn), and lifetime ISA (LISA) subscriptions with a 25.3% increase (£474m).

HMRC suggested the large increase in cash ISA subscriptions could be explained by the Bank of England’s base rate and interest swap rates, which were at their highest during the 2023/24 tax year. Increased returns to savings were likely to have increased the attractiveness of ISAs, HMRC added, as savers looked to reduce their income tax liabilities.

Head of DC workplace savings at Broadstone, Damon Hopkins, commented: “It is positive to see that millions more people are taking advantage of ISAs which offer a tax-efficient vehicle to build savings.

“Cash certainly remains king in the UK, with over two thirds of subscriptions directed to cash ISAs despite the long-term growth potential that other assets such as stocks and shares can offer savers.

“It may also reflect continued rumours around possible reforms to the ISA market with the Treasury keen to funnel more savings into UK stocks and therefore could limit the annual allowance for Cash ISAs.”

CEO of Murphy Wealth, Adrian Murphy, added that the fact 2.1 million of the 2.6 million new ISA subscriptions were cash “only underlines the Chancellor’s case that we need to reform this tax wrapper”.

“Far too much ISA wealth was already held in cash and that is only growing, despite the fact that this is not what ISAs were originally conceived for,” Murphy commented. “Ultimately, a cash ISA is a waste of the allowance – yet they account for two thirds of accounts.

“ISAs are a great option for long-term saving – particularly when used for stocks and shares. Stocks and shares account for 58.6% of the total market value of ISAs but only represent 19.7% of accounts – that in itself says a lot about what cash subscribers are missing out on.”

Murphy also said the figures would “hopefully embolden” the Chancellor to look at ISAs again in November’s Budget.

“ISAs are a highly successful financial invention, and now have a total of 15 million subscriptions,” he continued. “But today’s figures underline why they can and should be reformed to work better. Encouraging more people to invest their money, rather than have it sit on the sidelines in cash, should only be beneficial for their own financial situation, as well as the UK economy.”

---