People 'rushing' to open certain type of bank account before end of October

People 'rushing' to open certain type of bank account before end of October
-Credit: (Image: Reach Publishing Services Limited)


People are racing to pile millions of pounds into ISAs ahead of the new Labour Party Budget. An analysis by the investment platform InvestEngine found the number of savers with over £1m in tax-free Isas has tripled in three years – rising from 1,030 to 3,180.

At the same time, more than 10,000 savers now have Isas worth more than £750,000, while more than a quarter of a million have over £250,000. Ian Cook, of wealth manager Quilter, said changing Isa rules would hurt aspirational savers.

He told the Telegraph newspaper ahead of the October 30 Budget: “The decline of defined benefit pensions has put a greater onus on individuals to save for their future. Targeting Isas would remove the incentive to work and earn and save – to provide for yourself.

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“It feels whichever direction you turn, there’s taxation waiting round the corner. You’re taxed on what you earn, what you save, and then VAT when you spend.” Andrew Prosser, head of investments at InvestEngine, has also spoken out this week.

Mr Prosser said most ISA millionaires have achieved this status by putting their money into investments, rather than simply relying on interest paid on savings held in the accounts. He said: “Even someone who has put the maximum in a cash Isa every year since they [Isas] were launched in 1999 would be at around £275,000 – a great sum, but well short of millionaire status.

“In contrast, more than 3,000 people have become millionaires through their stocks and shares Isa, and a further 30,000 have built up more than £500,000 for their futures.” He added: “'While not everyone will be able to put away this amount of money each year, it shows the importance of thinking long term with investments and the power of compounding.

“Getting started early each year, even with small amounts, and not leaving investing until the end of the tax year, creates the potential to grow large sums for later in life.”