interactive investor comment: HMRC ISA statistics

interactive investor's experts discuss the latest ISA statistics published today by HMRC.

interactive investor, the UK’s second-largest direct-to-consumer investment platform, comments on the latest ISA statistics published today by HMRC.

Fall in stocks and shares ISA subscriptions

The number of investors subscribing to stocks and shares ISAs in the 2018-19 tax year fell by 450,000 from 2017-18, while those subscribing to cash ISAs subscriptions increased by 1.4 million. Overall, adult ISA subscriptions rose to 11.2 million in 2018-19 from 10.1 million in 2017-18.  

Around £67.5 billion was subscribed to adult ISAs in 2018-19, an increase of £2.3 billion on 2017-18. This was driven by the rise in cash ISA subscriptions, which rose by £7.3 billion. The amount subscribed to stocks and shares ISAs fell by £5.2 billion compared with 2017-18.

The average subscription in a stocks and shares ISA in 2018-19 was £9,331 and £5,187 for cash ISAs – a slight dip on 2017-18 figures

Myron Jobson, Personal Finance Campaigner, interactive investor, says: “Uncertainty around what Brexit might look like in the 2018/2019 tax year may well have soured investor appetite for stocks and shares ISAs, combined with a tough quarter four for markets in 2018.

“Cash savings rates have languished for over a decade since the base rate was cut to help the UK economy recover from the financial crisis. While cash savings is imperative for short term funding requirements and to serve as a rainy-day pot, those who can afford to lock a portion of their cash away for at least five years could be missing out long term.

“The average subscription in a stock and shares ISA in 2018-19 was £9,331 and £5,187 in cash ISAs, reflecting how generous the current £20,000 ISA allowance is.”

Increase in Junior ISAs

Around 954,000 total Junior ISA accounts were subscribed to in 2018-19, the scheme’s eighth full financial year since launch, up from 907,000 in 2017-18. Some £974 million was subscribed to in these accounts in 2018-19, around 57% of which was in cash.

The average amount subscribed to a junior stocks and shares ISA was £1,465 and £830 in a junior cash ISA.

Myron Jobson, says:

“It is difficult enough investing for yourself, so the prospect of investing for your children and the possibility it may go wrong is a challenge - which may explain why so many parents choose to save their Junior ISA in cash. However, Junior ISAs lend themselves well to stocks and shares investing, due to the long time horizon involved, giving it time to ride out some of the bumps in the road.”

Gender differences 

There were 11.439 million ISA subscriptions by women by the end of the 2017-18 tax year (latest data on gender available) compared with 10.594 million for men. However, men have higher average balances than women (£27,643 versus £24,831).

Stocks and shares ISA subscriptions were greater among men (1.3 million) than women (1.025 million), but the reverse is true when it comes to cash ISA subscriptions (2.889 million for men versus 3.585 million for women).

Moira O’Neill, Head of Personal Finance, interactive investor, says: “The data suggests that women are more savvy when it comes to putting their money in the tax-efficient ISA wrapper than men, but men are more inclined towards stocks & shares ISAs.

“This can have long term repercussions and does not bode well for the income potential of women. Our Great British Retirement Survey last year found that almost half (48%) of non-retired men already do, or plan to, derive some of their retirement income from stocks and shares ISAs, compared with just 18% of women.

“Peace of mind, not running out of money, and having enough money to leave behind to children are all top objectives. But to have a chance of meeting some of these, it can be worth reassessing your attitude to risk – which is extremely difficult in the current environment, where Coronavirus has caused more uncertainty than ever.”