HMRC reveals rise in cash ISAs

Seventy-six per cent of all ISAs subscribed to during the year up to April 2019 were cash ISAs, a figure up from 70% a year earlier, new data published by HMRC has revealed.
  
The figures showed there was £584bn in adult ISAs, which was down from a year earlier because of an 11% fall in the money held in stocks and shares ISAs.
 
The number of people paying into stocks and shares ISAs also dropped by 450,000 – to its lowest since 2007/8. HMRC stated that the amounts paid into stocks and shares ISAs fell £5.2bn from a year earlier.
 
Responding to HMRC’s data, Hargreaves Lansdown personal finance analyst, Sarah Coles, commented: “The introduction of the personal savings allowance in April 2016 saw cash ISA numbers plummet, but in the year to April 2019 they were back – attracting more than three quarters of all ISA savers.
 
“Stocks and shares ISAs, meanwhile, had a far tougher year – with fewer people paying into a stocks and shares ISA than any year since the financial crisis. Market movements unnerved a lot of investors. They ended the year higher than they started it, but there was something of a bumpy ride in between.

“At the same time there was an enormous amount of uncertainty around Brexit, and a deadline looming in March 2019. The fact an agreement looked unlikely by the deadline worried plenty of investors.

“ISA savers still recognise that if they are saving for the long-term of five to 10 years or more, it’s vital to consider the long-term potential offered by stocks and shares ISAs.”

The latest HMRC data also revealed that the number of new ISAs were up with 11.2 million people paying £67.5bn into an ISA in 2018/19 – a figure that increased by £2.3bn compared to the previous year. HMRC’s figures showed the average amount paid into ISAs in 2018/19 was £6,049.

A greater amount of money was also going into Lifetime ISAs (LISAs), with £604m paid in – up from £486m a year earlier – and this money was paid into 223,000 LISAs, which was up from 154,000 a year earlier.
 
“The number of people opening a LISA jumped by 45%, with 223,000 accounts opened,” AJ Bell personal finance analyst, Laura Suter, added.

“However, people were putting less money in the accounts, with the average subscription dropping by 16% to £2,709. This likely reflects the fact that in the first year of the LISA you could transfer your entire Help to Buy ISA balance without it counting towards your annual £4,000 LISA subscription, while in 2018/19 this was not possible.

“The average subscription figure doesn’t include the Government bonus, so means the average LISA saver is getting £677 of free money from the Government each year, topping the average annual savings up to £3,386. In total people have put £1,090,000 into their LISAs since launch, which means the Government has handed out a total of £272,500 in bonuses.”

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