ISA limits remained unchanged between the personal tax years of 1999-00 and 2007-08, and with the exception of the jump in 2010-11 have since increased annually in line with inflation until significant changes announced in Budget 2014. For the tax year starting 6th April 2014 but prior to 1st July 2014 the limit on the amount that could be subscribed into a combination of an Adult stocks & shares ISA and/or cash ISA was set at £11,880, providing that the amount subscribed into a cash ISA did not exceed £5,940. From 1st July 2014 all ISAs became New ISAs (NISAs). The NISA offers flexibility to save the NISA annual allowance of £15,000 in cash, stocks and shares or any combination of the two. Under the NISA rules savers can transfer previous years’ ISA savings freely between stocks and shares and cash if they wish. Therefore from 1st July 2014, savers have been able to split the amount they subscribe into an ISA between a Cash ISA and a Stocks and Shares ISA as they choose – up to the new overall annual ISA limit. The limit was increased to £15,240 for the 2015-16 tax year, from £15,000 in 2014-15, and remains at this limit for 2016-17. The 2016-17 limit for savings in a child Junior ISA is £4,080. This limit can be divided in any fashion between cash and stocks & shares. The annual subscription limits for Adult ISAs are shown in Table 1 below and those for Junior ISAs in Table 2.
|Tax year starting 6th April||Overall Subscription Limit||Cash ISA Limit|
From April 2017 an adult ISA allowance will become £20,000 pa
This section provides commentary and analysis on the key features of the ISA statistics contained in this release. The analysis is organised according to the published table numbers shown in Section 4.
The new ISA revolution
Chart 1 below shows that around 13 million Adult ISA accounts were subscribed to in 2014-15, down from 13.5 million subscribed to in 2013-14. The number of cash ISAs subscribed to fell slightly by 0.2 million and those to stocks and shares ISAs fell by 0.3m. The share of accounts subscribed to in cash stayed broadly static, at just under 80% of accounts. In addition, around 510 thousand Junior ISA accounts were subscribed to in the third full financial year (2014-15) since the scheme was launched, up from 432 thousand in 2013-14.
Chart 2 shows that around £79 billion was subscribed to Adult ISAs in 2014-15, a significant increase of over £20 billion compared to 2013-14. This is due to the changes in ISA rules implemented on July 1st 2014, which increased the annual limit significantly to £15,000 in any combination of cash and stocks & shares. Prior to this, the amount that could be subscribed in cash was limited to half of the overall ISA subscription limit. For example, between 6th April and 1st July 2014, a maximum of £5,940 of the £11,880 limit could be cash. £582 million was subscribed to Junior ISA accounts in 2014-15, around two thirds of which was in cash.
Market value of ISA funds (Table 9.6) At the end of 2014-15 the market value of Adult ISA holdings stood at £483 billion, a 3% increase compared to the value at the end of 2013-14. These holdings are currently split almost equally between cash ISAs and stocks & shares ISAs. The market value of cash holdings increased by around £9 billion to £237.5 billion. As there was a significant rise in cash subscriptions of over £20 billion following the increase of the limit, this implies an increase in withdrawals from cash ISAs (although HMRC does not track these). The increase in the market value of funds held in stocks and shares is likely to be driven by strong stock market performance in 2014.
Where Next For ISA’s
It is plain to see the popularity of ISA’s offering a tax free savings wrapper and greater flexibility. With increase variety for investors many analysts now expect ISAs to overtake pensions as the young pension savings plan