Public puts more faith in stocks and shares ISAs

The amount of money held in stocks and shares ISAs has overtaken funds held in cash ones for the first time in a decade.

People had 177.6 billion saved in stocks and shares ISAs on 5 April this year, compared with 172.3bn in cash ISAs, according to HM Revenue & Customs

This is the first time that savings in equity ISAs have outstripped money held in cash ones since April 2000, despite the fact people can save twice as much into equity ISAs each year as they can into a cash one.

Tax-free ISAs were first launched in 1999, and the public can currently pay 10,200 a year into them.

People can save all of their annual allowance into an equity ISA, or they can split it between a cash and an equity one, paying in a maximum of 5,100 into a cash ISA each tax year.

The amount of money held in equity ISAs has soared by 53 per cent in the 12 months to 5 April, largely due to the strong stock market gains during the period.

But the level of funds held in cash ISAs has increased by only 9 per cent in the same period.

The slower growth in cash ISAs is likely to be partly due to the low interest rates currently paid on the accounts, with the average ISA paying a return of just 0.6 per cent last month.

About 18 million people in the UK have an ISA, with 14.9 million paying money into one of the accounts during the year to 5 April.