Number of Isa millionaires soars as top 25 investors own an average of £8.9MILLION

The number of Isa investors with funds worth £1m or more has soared, new data shows.

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

The previous year, HMRC registered 4,070 Isa millionaires, meaning the number of Isa millionaires increased by 20 per cent in the space of a year.

In 2020 there were 1,480 Isa millionaires. This means that in two years, the number of Isa millionaires increased by 228 per cent, and the figure is likely to have risen even further since then.

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

But 25 of the most dedicated Isa savers have managed to build up pots worth an average of £8.9m.

The number of Isa millionaires has increased almost eleven-fold since 2016, when there were only 450 Isa millionaires.

What is the annual Isa allowance?

The Chancellor in the Budget froze the Isa allowance at £20,000 until 2030.

Our analysis reveals that 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 and maximizing the current annual allowance of £20,000 in a stock market Isa could reasonably expect to reach the millionaires’ row in about 22 years, assuming annualized returns of 7 per cent after fees.

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

PEP investors were then allowed to pool 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 seven figures with contributions of £126,200 made over 16 years. Its annualized returns over this period were 21 percent.

Plum’s Rajan Lakhani said: “While Labor has imposed higher taxes on pension wealth and increased the stamp duty surcharge on landlords who buy additional properties, there has been far less adjustment around Isas, which means generous rewards with fewer headaches for long-term investors.

“Investments and savings held within an Isa are exempt from income and capital gains tax, while those who have invested in the stock market outside the tax wrappers now face capital gains tax charges up to 24 percent after Rachel Reeves’ recent budget.”