2010 set to be best ever year for ISAs as higher allowances boost sales

News - Savings

Written by Ray Clancy

Monday, 04 October 2010 10:26

There have been record ISA sales following higher allowances and almost half of investors would invest more if they could, the latest figures show.

ISA inflows have averaged over £400 million a month net in the UK since October last year, when the ISA allowance was raised for the over 50s.

ISA inflows also increased in April this year, when the ISA allowance went up for the under 50s, the data from the Investment Management Association.

Its research also shows that almost half, some 47%, of investors say they would invest more if the ISA allowances were raised further such is the enthusiasm for investing in stocks and shares ISAs.

In October last year the ISA allowance for the over-50s increased from £7,200 to £10,200. That month’s net ISA sales were the highest for any October since ISAs were first launched in 1999. Since then gross ISA sales have averaged over £400 million a month, more than double the same period a year earlier, before the increase in the allowance.

There was also an increase in April 2010, when the ISA allowance went up to £10,200 for the under 50s, with net sales for April the highest since 2001.

The research also showed, that more than one in three, 36%, of investors said they would invest more if long term savings incentives remained consistent, with a higher proportion, some 44%, saying they would invest more if there was a lifetime tax free ISA allowance.

There was also some support for greater flexibility, with one in five, some 21%, saying they would invest more if there was some flexibility to move money in and out of pensions savings. This figure was understandably higher amongst younger investors, with a third, 32%, of couples yet to start a family saying this would encourage them to invest more.

‘Our research shows that people are positive about incentives to save with around half of existing investors saying they would invest more if the annual ISA allowance were raised,’ said Richard Saunders, chief executive of the IMA.

‘The IMA’s figures back this up, with ISA sales at the highest level for many years, following the recent increases in the annual allowance. The inflows we have seen since October last year are the highest since ISAs were first launched. There is a good chance that 2010 could be the best year ever for ISAs,’ he added.