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Bank of England: highest inflow into ISAs since records began in 1999

ended 31. May 2024

Data published by the Bank of England this morning has revealed that, in April, households deposited an additional £8.4 billion with banks and building societies, the highest net inflow since September 2022 (£8.8 billion). This was almost wholly driven by households depositing an additional £11.7 billion into ISAs, the highest since records began in April 1999. Newspage asked IFAs for their views on this, below.

3 responses from the Newspage community

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Scott Gallacher
Director at Rowley Turton
This significant increase in ISA deposits can be attributed to two main factors. Rising interest rates have led to higher earnings, resulting in more savers being caught by income tax. Consequently, many are turning to ISAs to shelter their savings from tax. Meanwhile, recent reductions in Capital Gains Tax (CGT) and Dividend Tax allowances have caught many smaller investors off guard. Previously, with higher allowances, these investors didn't worry much about CGT or Dividend Tax. The slashing of these allowances has prompted many to maximise their ISA use to avoid tax. These changes highlight the growing importance of tax-efficient savings like ISAs in today's higher tax environment.
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Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
With interest rates finally at normal levels, savers are having to pay tax on their bank interest for the first time in many years. This has led many to return to Cash ISAs where there is no Income Tax to pay on any interest received, a trend that is likely reflected in this data. You can deposit £20,000 per year into a Cash ISA, therefore it does not take too long to build up a decent sized savings pot. However, what many people forget is that over the long term, the returns from bank accounts, savings and Cash ISAs are likely to be far worse than the returns you will get from investing sensibly. History tells us that over the long term, the best investment strategy is a well diversified global equity portfolio.
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Riz Malik
Independent Financial Adviser at R3 Wealth
This was a record ISA season as more and more people set out to ensure they save and invest as efficiently as possible and capitalise on market performance. Even with higher interest rates, seasoned investors appreciate that cash is not always king once you factor in inflation and taxation. Either way it's encouraging to see this level of inflows into ISAs.