Stocks and Shares ISAs Hit 11-Year Sales Peak

Published: 7 July 2011 By Julian Stone Leave a Comment

Higher inflation and a new rise in the ISA allowance have helped drive sales of the tax-free savings accounts to an 11 year peak. Can switching to an ISA help you save?

Stocks and Shares ISAThe changing economic climate has made Individual Savings Accounts (ISAs) more appealing to investors.

That’s the conclusion of new figures from the Investment Management Association (IMA), the body which represents the UK investment management industry.

Net sales of ISAs invested in either stocks or shares rose to £528 million in May, the highest total for any month outside the usual spring ISA season in 11 years.

Investment in the tax-free savings accounts usually reaches its annual high at the end of the tax year, during March and April, as people hurry to take advantage of their tax-free allowances.

The trend of strong sales continuing into May mirrored the one seen last year after the ISA allowance was increased. This year’s rise took the ISA limit for stocks and shares to £10,680, further fuelling growth.

Part of what’s driving the trend is higher inflation. Savings just sitting in a low-interest bank account aren’t working hard enough for customers, according to Edward Johnson, head of broker Willis Owen. This is driving more people to put their money in tax-free investment ISAs.

Moneyhighstreet comments: “If you have savings that are just sitting in a bank account, they could be working harder for you. More banks are offering high-interest savings accounts, but the key benefit of the ISA is that you don’t pay tax on any interest you earn on your savings.

“You can invest up to £10,680 in ISAs in this financial year – but the maximum amount you can invest in a cash ISA is £5,340. You can make up the balance using a stocks and shares ISA, or even invest up to the full allowance using a stocks and shares ISA only.

“Using price comparison sites like Moneysupermarket.com, you can compare ISA rates and conditions to help you choose the best place for your savings.”

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