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Half a million people put off investing in an ISA

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The number of people subscribing their money to a stocks and shares ISA fell by 450,000 in the year to 2018/19, official statistics reveal.

There were 11.2 million adult ISA accounts that were subscribed to in the 2018/19 tax year, up from the 10.1 million recorded in the previous tax year.

While the number subscribing to cash ISAs increased by 1.4 million from 2017/18, those subscribing to stocks and shares ISAs fell by 450,000. The statistics from HMRC reveal that the share of cash ISAs has increased from 70% to 76% of accounts.

Around £67.5bn was subscribed to in adult ISAs in 2018/19, an increase of £2.3bn compared to a year earlier. HMRC noted the increase was driven by the rise in cash ISA subscriptions, which increased by £7.3bn. In contrast, the amounts subscribed to stocks and shares ISAs fell by £5.2bn.

In total, the market value of Adult ISA holdings stood at £584bn, a 4% decrease which was driven by an 11% decrease in the market value of funds held in stocks and shares.

Average subscriptions in 2018/19 were £6,049, a 6% decrease on the 2017/18 figure.

Of the 22 million adult ISA holders, the median ISA holder (by income) earns between £10,000 and £19,999, with average ISA savings of around £23,380. For ISA savers with incomes of £150,000 or more, values averaged £84,530. Higher earners also tend to subscribe their money to stocks and shares while lower income groups prefer cash.

The greatest number of savers is in the 65 and over group, and they also had the highest average ISA savings value of around £49,160.

The gender split, however, is relatively equal. In 2017/18, males accounted for a marginally higher proportion of the higher value ISA holders. Males accounted for 51% of ISA holdings worth £50,000 or more, in contrast to owning 48% of holdings worth up to £2,499.

And, when it comes to regions in England, the proportion of adults holding ISAs is highest in the South West at 48% and lowest in London at 37%. This is compared to an average of 42% for all English regions.

Turning to Junior ISAs, 954,000 accounts were subscribed to in 2018/19, up from 907,000. Around £974m was subscribed to Junior ISA accounts, 57% of which was in cash.

Lifetime ISA subscriptions jumped 45%, with 223,000 accounts opened, but the average amount dropped 16% to £2,709.

Laura Suter, personal finance analyst at investment platform AJ Bell, said: “The market uncertainty that we’ve seen in recent years appears to have put people off investing their ISA money, with 450,000 fewer people subscribing to stocks and shares ISAs compared to 2017/18.

“At the same time cash ISA use has leapt by a fifth, after years of falling figures. The introduction of the Personal Savings Allowance, which gave most people a tax-free allowance, seriously dented the popularity of the cash ISA but the tide could be about to turn. The average amount we’re all putting into our ISAs stayed about flat, with £5,187 put into cash ISAs and £9,331 into stocks and shares ISAs.”

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