According to the Investment Management Association, fewer higher rate taxpayers decided to use their Individual Savings Account allowance before the end of the tax year.
The IMA's annual survey has produced these results, claiming that only 16% of ISA investors paid tax at the higher rate. The number of people that pay tax at the lower rate virtually doubled with 11% investing in an ISA, compared to 6% last year. Basic rate tax ISA investors fell from 58% to 55%.
Our View
ISAs have had a lot of bad press recently, especially because some of the tax incentives were removed at the start of the tax year. As expected, mini cash ISAs made up the majority of investment although overall, ISA savings were down.
The Government is their own worst enemy at encouraging people to save. We really do not believe it is in the Government's best interests to get people to save - maybe this is why tax incentives are withdrawn, rather than added and the spending culture is allowed to continue.