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Gross inflows into stocks and shares Isas surge

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

Since October 2009 to August 2010 net Isa sales have totalled £4.66 billion. According to IMA research, this number would be greater if the allowance was raised even more.

Following the previous increase in annual contribution limits for Isas, the IMA says net sales of Isas in October 2009 were the highest for any month since the savings account was first introduced in 1999. In April this year, when the allowance was extended to the under 50s, net sales were at their highest since 2001.

The research follows last week’s warning that the government may look to reduce tax incentives on Isas in its comprehensive spending review next month.

Andy Love, a member of the Treasury select committee, last week said the coalition government may target Isas as part of its package of cuts.

Speaking at a fringe event during the Labour party conference, Love said: “We have seen the coalition cancel Child Trust Funds and the Savings Gateway, which were two of the primary incentives that were offered under the previous government.

“There is also a debate over Isas and, while the coalition is saying they are supportive of Isa structures, there have been a lot of rumours that they may be subject to the spending review.”

According to the IMA research, based on a survey of 2,100 investors, 36 per cent said they would invest more if long term savings remained consistent and 47 per cent said they would invest more if the limit was raised.

Meanwhile, 44 per cent said they would put more money in if there was a lifetime tax-free Isa allowance. From next April the Isa limit will be index-linked.

Following its decision to scrap CTFs, it is understood the Treasury is consulting over plans to launch “junior Isas”. These would allow tax-free investment in cash or stocks and shares up to an annual limit and be owned
by the child, but locked in until they reach 18. Unlike CTFs, however, there would be no government contribution payments.

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There is one comment at the moment, we would love to hear your opinion too.

  1. Not surprising really when you look at the poor rates obtainable on a Cash ISA..

    In addition the very mediocre performance by some of the so called ‘expert’ fund managers has left many investors thinking (rightly or wrongly) …..that they can do better themselves.

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