There has been considerable commentary on the merits of the UK ISA. We assess the motivation behind its creation and discuss the key points.
The consultation period runs to 6th June. We strongly urge anyone interested in the health of UK equities to participate in the consultation, which can be accessed here. We highlight our thoughts in this note.
We have a problem. The UK equity market has a systemic issue, with negative fund flows driving low valuations, resulting in heightened de-equitisation through M&A. A UK ISA is not a silver bullet, but an important element in resuscitating the equity market. We estimate it could drive £4bn pa of additional investment in UK companies.
Policy objectives for the UK ISA
The consultation document sets out the following as the policy objectives:
“The main objective for the UK ISA is to support a culture of investment in the UK and to give people the opportunity to invest and benefit from the UK’s vibrant capital markets and high-growth companies. It will also support the wider work being done to increase the capital available for UK businesses and to support the competitiveness of UK equity capital markets.”
We see a number of key aspects to the introduction of a UK ISA:
- To direct tax benefits to support UK companies, the UK equity market, and, therefore, UK economy.
- To grow a long-term savings culture in equities, given that cash savings generally lose value in real terms.
- To support UK capital markets, which provide a crucial role in providing funding for UK businesses. In particular to ensure that UK companies are able and willing to scale in the UK.
- To increase the competitiveness of UK capital markets. To make the UK the market of choice for growth companies and to attract inwards investment.
- Making the UK ISA exempt from IHT would materially increase its attraction and enable ISA providers to recommend it and meet their obligations under Consumer Duty. This would be similar to the exemption for AIM companies and also engender a long-term approach to the benefit of the UK economy.
Reasons for introducing the UK ISA
- UK capital for UK investment – the globalisation of investment has been a long-term theme, but has been far more prevalent in the UK than other markets. This may make sense for the pension fund, charity or individual investor, but is disastrous for the domestic economy. It directly impacts on the rate of economic growth, the cost of capital for UK companies and the savings culture in the UK. The recent divestment of UK equities by Coutts provides another stark example of the problem.
- Encourage long-term savings culture – far too many people in the UK have no or insufficient savings. Furthermore, the majority of those that do save focus their savings on low returning assets (eg cash). On top of this, the relatively weak performance of UK equity markets, which has been driven by the globalisation trends that the UK ISA is trying in part to rebalance, materially undermines the savings culture.
- Cost of capital impact competitiveness – companies listed in the UK currently have a competitive disadvantage, as they trade on lower valuation multiples than competitors listed on international markets. This means that raising capital is more expensive in the UK, restraining UK listed companies’ ability to use equity to make acquisitions and ensuring that they are more likely to be seen as targets rather than acquirors. The recent discussion around Shell demonstrates how important this facet of equity markets is. Complacency is not an option.
- Funding growth – the current valuation discount doesn’t just hinder the desire and potential for UK listed companies to raise growth capital, it actively discourages it. This can be seen by the surge in share buybacks, which reflects the relative attraction of buying in your own shares vs investment. The banks are a prime example of this – we estimate they will buy back c.£8bn of shares this year. If valuations were higher, and this was less attractive, the funds could be used to drive >£50bn of additional lending.
- Targeting tax benefits – ISAs are tax efficient savings schemes, but this benefit is increasingly being used to support and grow companies that are listed overseas. It makes sense for schemes that provide tax benefits to be focused on growing the domestic economy.
- Other changes required – we see the UK ISA as just one measure to encourage investment in UK equities. Other important changes are to address the long-term decline in ownership of the UK equity market by pension funds and removing stamp duty to create a level playing field with the US market.
How to turbocharge the UK ISA
A key question has been the scale of contributions to a UK ISA and whether it would be meaningful in the context of the overall market. Making the UK ISA exempt from IHT would:
- Make the UK ISA compelling for a broad range of people.
- Encourage savers to consider moving cash into equities.
- Encourage a long-term savings culture.
- Be an extension of the existing IHT exemption for AIM shares.
- Ensure that ISA providers could effectively market the UK ISA and deliver against their Consumer Duty requirements.
The impact on annual IHT revenue would be modest, but it would make the UK ISA compelling.
The key questions
There has been considerable commentary on the merits or otherwise of the UK ISA. In this section, we address the key points that have been highlighted.
Will it be effective?
There have been suggestions that the amount invested in a UK ISA is irrelevant in the context of a market worth £2.5tn. If it raised say £4bn, then that amounts to only 0.2% of the overall market. This is factually correct, but does not recognise the drivers of share price performance.
The key driver of share prices over time is fund flows. This is clearly shown by the divergence of performance in the UK (which has been seeing outflows for years) and the US (which has been seeing inflows). Whilst relative index compositions also have an impact, there is no question that the c.£8bn of outflows from UK equity funds in 2023 alone have had a significant impact on share prices of UK listed companies.
Equity funds are key in driving the direction of the market (given their scale and unit size) as well as being vital in supporting IPOs and equity capital raises, as they are cornerstone investors. In this context, a £4bn inflow would be a material counter to the current level of outflows.
Although it will not be a silver bullet, the UK ISA can definitively be part of the solution. Furthermore, the annual allowance would enable investment in UK equities to grow materially over time.
How big could it be?
This is a key question and, of course, it is only conjecture until it is in place. Here are our thoughts:
- Most people who max out their current ISA allowances are likely to consider a UK ISA if they have funds available. In 2021/22, 802,000 people maxed out their stocks and shares ISA and 691,000 maxed out their cash ISA.
- We expect most of those who max out their Stocks & Shares ISA to want to also take out a UK ISA.
- We expect many of those who max out their Cash ISA to also open a UK ISA, given the additional tax benefit.
- If the UK ISA is effectively marketed, we expect that some people who do not max out their ISAs will consider doing so.
- We also expect some people who do not currently apply for an ISA to do so, particularly given the changes in tax on dividends and CGT.
A recent poll of 2,000 adults undertaken by Opinium found that:
- 48% of UK adults stated they would consider a UK ISA;
- 18% would definitely consider opening one;
- 63% of those with a Stocks & Shares ISA would consider opening one;
- 57% of those with a cash or Stocks & Shares ISA would consider opening one.
A reader poll from This is Money at the Daily Mail showed that 43% wanted to invest in the UK ISA, with 21% waiting to see the rules and 26% saying they wouldn’t. This was based on 963 votes.
At this stage, the level of contributions is merely conjecture. The following table shows the potential subscriptions based on the number of people who subscribe in full for a Stocks & Shares ISA or a Cash ISA. We have also included a number for people who apply for a Cash ISA (based on those allocating £10k-20k) who could potentially switch some of their subscription to a UK ISA. The amounts shown are based on the % in each category that apply for a UK ISA.
Figure 1: £bn potential contribution |
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Source:ONS, Peel Hunt estimates |
In our view, the majority (say 80%) of those subscribing in full to a Stocks & Shares ISA will apply for a UK ISA. We then assume that 30% of those applying for a Cash ISA in full will do so, with 10% of those subscribing >£10k. We have also incorporated a number for those that do not currently apply for an ISA.
Figure 2: Potential level of subscriptions | ||
% |
£bn |
|
Stocks max |
80 |
3.2 |
Cash max |
30 |
1.0 |
Cash (>£10k only) |
10 |
0.4 |
New ISA |
0.3 |
|
Total |
5.0 |
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Source: Company accounts, Peel Hunt estimates |
This gives a total of £5bn, which equates to 1m people applying for a UK ISA or 5% of the total number of people that apply for an ISA. For simplicity, we have assumed that all subscribers use their full allocation.
In order to consider the net effect, we need to incorporate re-weighting of portfolios. We estimate that this impact could offset c.20% of the increase, which would leave a net of £4bn. Cumulatively, this would be a material additional fund flow into the UK (£40bn over 10 years).
What should be eligible for the UK ISA?
We have considered this carefully and taken soundings from many industry participants. Our thoughts are as follows:
- A wide range of investments provides greater choice for investors;
- A simple message on eligibility enhances marketing effectiveness;
- The allowances can be altered in future years to ensure the impact is larger if required.
Our conclusion is that the optimum eligibility would be to enable all UK quoted companies with a primary listing and funds that invest in UK quoted companies or assets. We recommend that this should not be dependent on location of incorporation, to ensure breadth of choice (particularly in investment companies) and to enhance London as a listing venue.
Although a market cap limit would increase the focus on the UK, it would be more restrictive for investors and would impact on the marketing messaging.
Do we need another ISA?
A reasonable question is the level of complexity around ISAs and whether that puts off some people. Our thoughts on this are:
There are too many products (currently six) – Cash ISA, Stocks & Shares ISA, Junior Cash ISA, Junior Stocks & Shares ISA, LISA and Innovative Finance ISA.
- We recommend merging the Cash and Stocks & Shares ISAs (both for adult and junior ISAs). That would improve flexibility of investment choices and enable greater savings to be invested in higher returning asset classes. Savings rates in Cash ISAs are often less attractive than normal savings rates, with the difference potentially larger than the tax saving. In addition, there is very limited benefit to the UK economy from individuals holding cash in their ISA.
- Transfers between ISA can be made currently, but there are a number of rules to be followed and forms to be filled in and it takes time, all of which inevitably reduces the desire to make a change.
- Although they are growing, there are still less than a million Lifetime ISAs (LISAs) since they launched in 2017, with 232,000 opened in the enhancement on offer, but are probably less aware that there is a 25% penalty fee (on the total in the account) if the money is withdrawn and not used for a first home or retirement. In addition, the age limitations do not make sense for a long-term savings product and the LISA is not as attractive as saving into a pension. There are plenty of good reasons to end the ability to open a LISA.
- The Innovative Finance ISA was introduced in 2016 to reflect the interest in peer-to-peer lending. There has been low take-up and this seems an unnecessary part of the ISA product range. Furthermore, these loans are not protected by the Financial Services Compensation Scheme and the level of access to funds is regularly restricted and there may be exit fees. Only 17,000 Innovative ISA were taken out in 2021/22.
- The ability to add further funds to Help to Buy ISAs could be ended (the ability to open a Help to Buy ISAs ceased in 2019).
- The Junior ISA could be made similar to the adult ISA (except for the application process) – there’s no good reason for a £9k amount vs the £20k for an adult ISA.
Although a UK ISA would be an additional product, we believe it would be simple to understand and would actually encourage more people to save.
Would it be better to increase the main ISA?
This would be simpler and easier to implement. Given current investment trends in existing ISAs, increasing the main ISA would inevitably increase investment in UK listed companies; however, this would be a marginal gain given the ability to utilise the additional allowance in companies that are listed overseas, funds focused on overseas companies or alternative asset classes.
An alternative to the UK ISA could be to mandate a proportion of the existing ISA to be directed at UK holdings. That would be possible, but far more complex to process and manage. In addition, it would remove the marketing potential around the introduction of a UK ISA.
Will costs be higher?
The platforms do not currently charge for opening an account, holding cash or inactivity. As a result we anticipate that there will be no additional cost for opening a UK ISA vs the main ISA.
The charges are based on either a flat fee or a % fee based on the value of funds. And there can be also a charge for activity. There are a number of variables when considering overall costs, so the actual outcome will depend on the ISA provider, the value of the funds in the ISA and the level of activity.
Will it be expensive to introduce?
This would come in the form of tech spend from the platforms and marketing from providers. We expect the tech and marketing spend to be from existing budgets rather than incremental spend.
Will it reduce tax revenue?
There have been suggestions that HMRC is concerned about the cost of introducing the UK ISA. The immediate impact on tax revenue would be c.£50m, which is based on £4bn raised and the 4% dividend yield of the FTSE All-Share at a blended tax rate of 30% (assumes that the dividend allowance is already utilised). Compared to the importance of the UK equity market for economic growth and tax revenue, this is a tiny amount of no material consideration.
Will a UK ISA restrict choice?
Clearly there would be lower choice compared to the ability to utilise the main ISA for a broad range of overseas investments. The key question is whether it would be too restrictive or encourage poor outcomes.
- There would still be a very wide geographic exposure given the broad spread of UK companies.
- There are a large number of companies listed in the UK (>1,300), with a total market capitalisation of £2.5tn.
- Anyone can invest in global companies within the main ISA.
- Anyone can invest in global companies outside the ISA wrapper, they just don’t get the tax benefits.
- There is exposure to a broad range of end markets (albeit less to technology than the US market).
- Investing in the UK avoids exchange rate risk.
There have been plenty of comments around the weak performance of the UK market compared to overseas markets. Of course these are backward looking and reflect the outflow of funds from UK equities. It might turn out that this is a good time to be overweight UK equities, particularly if fund flows reverse.
Will investors re-allocate weightings?
Inevitably some investors will allocate their UK investments to the UK ISA and increase overseas allocations in their main ISA. This is likely to be particularly relevant among wealth managers that aim to provide a portfolio weighted to global asset allocation.
Nonetheless, the minimum investment in the UK for someone that invests the full £25k would be 20% and that would build up over time. This compares to the UK’s current global weighting of only 4%.
Will it really be focused on investing in the UK?
There have been a number of comments that reflect on the international nature of many of the companies listed in the UK, particularly the larger businesses. This is correct given that companies in the FTSE1o0 have c.70% of sales overseas.
However, we see the UK equity market as a whole as fundamental to economic growth, savings and tax revenue. Companies with wide geographic exposure still provide material benefits to the UK in terms of high value jobs, dividend payments, CGT and stamp duty as well as sustaining a broad ecosystem (eg lawyers, accountants, advisors etc). Just consider how much of a blow to the UK markets, economy and tax revenue it would be if Shell decides to move to the US, let alone the domino effect. These companies also provide a public good in terms of extolling best practice and other benefits (eg sustainability and leadership).
Furthermore, investors that want to focus on companies weighted to the UK have the ability to self-select these companies or to buy funds that invest in small & midcap companies, which have a higher domestic weighting.
ISA Consultation
In this section, we discuss the ISA Consultation document and our thoughts on the questions posed. The full document can be found here. The consultation runs until 6th June and we strongly recommend any interested parties to contribute their views.
Question 1: Should ordinary shares in UK incorporated companies that are either listed on a UK recognised stock exchange or admitted to trading on UK recognised stock exchange be eligible for the UK ISA?
Peel Hunt Answer: We believe it is important for a UK ISA to be easily understood by investors. Including all companies listed on a recognised UK stock exchange (on the Main Market, AIM, Cboe and Aquis) would be easily understood and provide clarity over eligibility. It would also ensure a wide range of companies across multiple sectors would be eligible for the UK ISA, to ensure that investors are able to have a diverse portfolio.
Broad and easily understandable criteria would increase the level of interest and scale of investment in the UK ISA. We also believe that it would increase the level of interest in ISAs overall and, specifically, in Stocks & Shares ISAs.
We agree that the criteria should include all companies that are UK incorporated or listed on a UK recognised stock exchange, but believe it should be extended to include overseas incorporated companies. Again, this ensures simplicity of eligibility and increases the breadth of companies, particularly investment companies. It would also encourage companies to list in the UK and bring additional growth and capital to the UK market.
The proposed changes in the listing rules will combine the premium and standard listings. The changes can be found here and are scheduled to be implemented in 2H24. We recommend that the eligibility of the UK ISA is based on the new listing rules and index inclusion.
Question 2: Should collective investment vehicles be eligible for the UK ISA and if so, which vehicles specifically? What should be the minimum requirement for each of the underlying investments and how would each be monitored by ISA managers?
Peel Hunt Answer: We believe it is important to include collective vehicles to enable investors to diversify their risk, to outsource investment and to increase choice. This should include both UK and overseas incorporated companies.
We recommend following the Investment Association approach to manage eligibility, whereby 80% of funds need to be invested in eligible UK companies. The Investment Association (IA) commentary on UK All Companies funds eligibility can be found here.
Question 3: Should corporate bonds be eligible for the UK ISA?
Peel Hunt Answer: We believe that the focus should be on equities and permanent capital in order to encourage long-term financing rather than include debt financing. Also, this would ensure the product is straightforward for investors to understand. We recommend that corporate bonds should not be eligible.
Question 4: Should gilts be eligible for the UK ISA?
Peel Hunt Answer: The key rationale for the UK ISA is to encourage investment in growth assets and to ensure that investment supports growth assets. As such, it would make no sense to include gilts. We recommend that gilts should not be eligible.
Question 5: Are there other investments that already qualify for an ISA that should be eligible for the UK ISA? How would they meet the policy objectives?
Peel Hunt Answer: The main other investments that qualify for an ISA are cash, peer-to-peer loans, exchange traded funds (ETFs) and exchange traded commodities (ETCs). The policy objectives for the UK ISA are: to support a culture of investment in the UK; to give people the opportunity to invest and benefit from the UK’s capital markets and high-growth companies; to support the wider work being done to increase the capital available for UK businesses; and to support the competitiveness of UK equity capital markets.
As such cash, peer-to-peer loans and ETCs do not meet the policy objectives. An ETF based on the UK market would support the policy objective, albeit not as effectively as direct investment. We recommend limiting eligible investments to ordinary shares that are listed or admitted to trading on UK recognised stock exchange.
Question 6: Should the UK ISA allow subscriptions to multiple UK ISAs in the same tax year?
Peel Hunt Answer: The initial size of £5,000 means that allowing only one UK ISA would be simpler for investors to manage and understand.
Question 7: Should transfers from any type of ISA to a UK ISA be allowed? Should there be a limit on transfers from other types of ISAs to a UK ISA?
Peel Hunt Answer: Enabling transfers from other ISAs would increase flexibility and improve the attainment of the policy objectives. For example, investors may choose to switch from Cash ISAs into a UK ISA.
Question 8: Are there any downsides to the government’s proposals on transfers out of a UK ISA?
Peel Hunt Answer: Enabling transfers from a UK ISA could result in investors utilising the additional ISA allowance and then moving the funds, which would undermine the policy objectives. We agree with the government’s proposals to prevent transfers. Investors would still be able to access their capital, but this would be outside the tax benefit of the ISA wrapper.
Question 9: Should the UK ISA have cash holding rules? Which rules should be included in the UK ISA?
Peel Hunt Answer: We recommend that there is no limit on cash holdings in order to ensure flexibility, particularly on initial contributions and on sale of investments. Creating cash holding limits would create unnecessary complexity. We concur with the government’s proposal to prevent interest bearing holdings to ensure that the ISA is used to deliver the policy objectives.
Questions 10 and 11: Are there any other design features that the government should consider at this stage? Are there any other unintended consequences from this approach?
Peel Hunt Answer: The government is proposing the same tax benefits as the existing Stocks & Shares ISA. We recommend that the UK ISA is made IHT free to provide an additional incentive in order to deliver on the policy objectives. This would also enable ISA providers to recommend the UK ISA vs the Stocks & Shares ISA and meet their Consumer Duty obligations.
ISA – a successful savings product
In this section, we discuss the key elements of the ISA to provide background for those less familiar with the ISAs on offer and the scale of investment.
Individual Savings Accounts (ISAs) were introduced by Gordon Brown in 1999 as a successor to PEPs and TESSAs. They have become a key part of the UK savings market for individual investors, particularly as they are more flexible than a pension. Over 27m adults hold an ISA and 13m ISAs were opened in 2021-22 with a total subscription value of £68bn (source: ONS). This article by Gordon Brown gives his views on their purpose and success 20 years after launch.
The key elements of the existing ISA rules are:
- A total of £20k can be invested per annum and there is no carry forward of allowances if not utilised. Investments in an ISA are not subject to income tax on dividends or CGT, but stamp duty is paid on purchases where required (0.5% on shares). ISAs are part of an estate when considering inheritance tax (ie 40% tax over certain exemptions).
- The key advantages of ISAs are that they are not subject to a holding period, there is no limit on the total held within ISAs and the only time limit is the decease of the holder (and even then they can be passed on to a partner). This is particularly attractive for people wanting to save, but also wanting access to their savings as required.
- The total annual investment in an ISA is £20k, which can be spread across a combination of the ISAs available.
- You must be over 16 for a Cash ISA and over 18 for other ISAs. You must be under 18 for a Junior ISA and these have lower limits on subscriptions.
- The attraction of ISAs has increased with the changes in the UK dividend tax-free allowance (reduced from £2k to £1k in April 2023, and to £500 in April 2024) and the reduction in the tax-free element of capital gains (reduced from £12.3k to £6k from April 2023, and to £3k from April 2024).
Currently, six different ISAs are available:
- Cash ISA (£20k limit).
- Stocks and Shares ISA (£20k limit).
- Cash Junior ISA (£9k limit), which was introduced in 2011.
- Stocks and Shares Junior ISA (£9k limit), also introduced in 2011.
- Innovative Finance ISA (IFISA £20k limit). This enables savers to access peer-to-peer lending through an ISA. The 2021-22 data showed that there were 16,000 new IFISA accounts in the year. This was a topical area when first introduced in 2016, but take-up has been very low.
- Lifetime ISA (LISA £4k limit). This was introduced in 2017 and is aimed at people aged 18-39 wanting to save for a first home or retirement, with the government providing a 25% bonus on your contributions (ie £1k per annum). Another restriction is that the maximum value of the first home you can buy using a LISA is capped at £450,000 – and that limit is not index-linked. The number of people that have actually used it for their first home is still modest (5,800 in 2021-22 and 56,100 in 2022-23). There was £1.7bn of subscriptions into LISA last year at a cost of £425m to the taxpayer.
There also was a Help to Buy ISA, which was introduced in 2015 and enabled people to save to purchase a first-time property. There was a maximum subscription of £2,400 per annum and a total limit of £12,000. The government topped it up by 25% (max £3,000). This scheme ended in 2019, but holders of existing Help to Buy ISAs can continue to subscribe until 2029. The total of government-funded bonuses from inception to March 2023 was £887m, supporting 558k property completions.
The Stocks & Shares ISA
As mentioned above, £20k can be invested in a Stocks & Shares ISA per annum. The majority of these funds are invested through platforms (eg Hargreaves Lansdown, AJ Bell and interactive investor) and wealth managers (eg Rathbones Group#, RBC Brewin Dolphin, Quilter and Evelyn Partners). Having originally been focused on UK investments, the spread of available products is now diverse and includes:
- UK companies;
- UK funds;
- Overseas companies;
- Gilts;
- Corporate bonds.
There is a choice between self-selecting the constituents of the ISA, or by having an expert (eg wealth manager) or robo-adviser choose the investments. An example of the latter is the Nutmeg ISA, which uses ETFs.
You have to be aged over 18 and a UK resident for tax purposes to subscribe for a Stocks & Shares ISA, which means that 54m people meet the eligibility criteria.
The scale of the ISA market
The latest data from ONS is for the year to April 2022. In that year, there were 13m ISAs taken out, with a total subscription value of £68.5bn. The following chart shows the split per type of ISA.
Figure 3: Split of ISAs by product |
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Source: ONS |
This shows that the Cash ISA was the most popular, ahead of the Stocks & Shares ISA with 3.9m accounts. The level of subscriptions per type of ISA are shown below.
Figure 4: Subscriptions per product |
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Source: ONS |
In terms of subscriptions, Stocks & Shares ISAs received the largest contribution at 50% or £34bn. The JISA, LISA and IFISAs combined were 5% or £3.3bn.
The total amount invested in ISAs was £751bn at April 2022, with the split shown below.
Figure 5: Split of amount invested in ISAs |
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Source: ONS |
The £456m of value held in Stocks & Shares ISAs is comprised as follows.
Figure 6: Split of value held in Stocks & Shares ISA |
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Source: ONS |
This shows that collective vehicles (ie Open Ended Investment Companies, Unit Trusts, Investment Trusts and UCITS) dominate the ISA market with a combined 74% of value. Direct share holdings comprise 17% of the total, with 5% in cash and 3% in life insurance.
Helpfully, the IA includes greater detail on the breakdown of assets. Note that this only includes funds and so excludes direct shareholdings and Investment Trusts. Nonetheless, this provides greater insight into the equity holdings within ISAs. The following chart shows the total value of ISA holdings (as disclosed by IA members, such as Fidelity etc).
Figure 7: Number and value of ISAs (as per IA members) |
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Source: Investment Association * note these numbers capture the majority of funds in the space |
This shows that the Stocks & Shares ISAs provided by IA members have grown in both number and value subscribed.
The next chart shows the split by asset class.
Figure 8: ISA allocation by asset class |
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Source: Investment Association * note these numbers capture the majority of funds in the space |
This shows that equities receive the largest allocation at 63%, ahead of mixed asset at 19%. The latter includes a mixture of equities and fixed income.
The following chart shows the split of the £87bn allocated to equities.
Figure 9: ISA equity allocation by category |
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Source: Investment Association * note these numbers capture the majority of funds in the space |
This shows that global funds are the most popular at 28% allocation, followed by UK Allcap at 28%. The overall allocation to the UK is 40%, which is split UK Allcap 28%, UK income 10% and UK Smallcap 2%.
The smallcap segment at 2% amounts to £2.0bn of allocation, which reflects the low overall weighting of this segment.
The following chart shows the level of ISA subscriptions by income bracket.
Figure 10: Level of ISA subscriptions by income bracket |
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Source: ONS |
This shows that the median ISA holder had annual income of between £20,000 and £29,999 (based on 2020-21 data), with an average ISA market value of £29k. This demonstrates that the ISA is effectively operating as a savings product across a broad range of incomes.