Number of Isa millionaires soars, as high 25 buyers maintain a median of £8.9MILLION

The number of Isa investors sitting on pots worth £1million or more has soared, new data shows.

The most recent data shows that in 2022 there were 4,850 people who had pots worth a cool million or more, according to a Freedom of Information request from money app Plum to HMRC. 

The year before there were 4,070 Isa millionaires recorded by HMRC, meaning the number of Isa millionaires surged 20 per cent in the space of a year. 

In 2020 there were 1,480 Isa millionaires. It means in two years, the number of Isa millionaires jumped by 228 per cent – and it is likely this has surged further since.

The average Isa millionaire now has a pot worth £1.35million, Plum data reveals. 

But 25 of the most dedicated Isa savers have managed to rack up pots averaging an eye-watering £8.9million.

Isa millionaire numbers have risen almost eleven-fold since 2016 when there were just 450 Isa millionaires. 

What is the annual Isa allowance? 

The Isa allowance was frozen at £20,000 until 2030 by the Chancellor in the Budget. 

Our analysis reveals the Isa allowance would be worth more than £26,000 if it had risen with inflation since it was raised to £20,000 in 2017.  

A saver starting from scratch today maxing out the current £20,000 annual allowance into a stocks & shares Isa could reasonably expect to reach millionaires’ row in around 22 years, assuming annualised returns of 7 per cent after fees. 

Isas were introduced in 1999, replacing their predecessor Personal Equity Plans (PEPs) which were launched in 1987 by then-chancellor Nigel Lawson with an annual allowance of £2,400.

PEPs investors were then allowed to lump their money into the new Isa tax wrapper.

Lord John Lee of Trafford – an expert stock-picker – became the first Isa millionaire in 2003, reaching the seven-figure milestone on contributions of £126,200 made over 16 years. His annualised returns during this period were 21 per cent. 

Rajan Lakhani of Plum said: ‘While Labour has imposed higher taxes on pension wealth and increased the stamp duty surcharge on landlords buying additional properties, there has been far less tinkering around Isas, meaning generous rewards with fewer headaches for long-term investors. 

‘Investments and savings held within an Isa are exempt from income and capital gains tax, whereas those who have invested in the stock market outside of tax wrappers now face Capital Gains Tax charges of up to 24 per cent following Rachel Reeves’ recent Budget.’