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£400M a month Isas show limit rise pays off

Gross inflows into stocks and shares Isas have averaged over £400m a month since the Isa allowance was raised to £10,200 for over 50s in October last year, according to the Investment Management Association.

Between October 2009 and August 2010, net Isa sales totalled £4.66bn. Following the increase in the limit, the IMA says net sales of Isas in October 2009 were the highest for any month since the savings account was introduced in 1999. The research follows a warning that the Government may look to reduce Isa tax incentives in its spending review.

Speaking at a fringe event during the Labour conference, Treasury select committee member Andy Love said: “We have seen the coalition cancel child trust funds and the savings gateway, which were two of the primary incentives offered under the previous Government. There have been a lot of rumours that Isa may be subject to the spending review.”

According to the IMA research, based on a survey of 2,100 investors, 36 per cent say they would invest more if longterm savings incentives remain consistent and 47 per cent say they would invest more if the limit was raised. Almost 45 per cent say they would save more if there was a lifetime tax-free Isa allowance.

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