The number of new ISA accounts fell to an 18-year low during the last tax year, figures from HM Revenue and Customs (HMRC) have revealed. The data shows that savers subscribed to 10.8 million ISA accounts during the 2017-18 tax year, down from 11.1 million in the previous tax year. This represents a fall of 10%. Cash ISAs saw the biggest decline, with the number of subscriptions down by 697,000. In contrast, Stocks and Shares ISAs rose in popularity – with 246,000 more accounts opened compared to the previous tax year.
The declining interest in Cash ISAs is understandable given the abysmally low interest rates on offer at a time when inflation spiked and put household finances under pressure, meaning real returns on cash savings were negative. Also of note is the fact that, for most Britons, cash ISAs are arguably surplus to requirements; basic rate taxpayers no longer pay tax on their first £1,000 of savings interest anyway and higher rate taxpayers can earn up to £500 of interest tax free.