New ISA savers pushed up account applications by 52% this month, as new ISA savings limits came onstream on 6th April, according to a new report by the Fair Investments Company.
Applications for both cash ISAs and stocks and shares ISAs were up by more than half in the first three days of the new tax year, compared with the same three days last year, as ISA savers rushed to use the new revised ISA limits of £10,200 for 2010/11.
ISAs, or Individual Savings Accounts, provide tax-free growth on savings in cash ISAs, or tax-advantaged growth in stocks and shares ISAs, and ISA savers may avail of both types of ISA account. Savers can invest up to half their total allowance, in other words £5,100 in a cash ISA, which combines the tax-free benefit with the safety and security of a bank or building society account.
They can also access the long-term benefits of the stock market by opening stocks and shares ISAs, where they can invest up to the remaining £5,100 of their ISA limits.
Those who do not wish to have a cash ISA can use the new ISA limits to place the full £10,200 in stocks and shares ISAs, although the reverse does not apply: the full amount can not be placed in the cash ISA, which is subject to ISA limits of £5,100.
Since their launch ten years ago, ISA savings have been a big hit with consumers and 37% of UK households now include one or more ISA savers, according to Halifax.
Of those shopping around for ISA best buys this year, 81% will be opting to use stocks and shares ISAs for their ISA savings, as returns on cash have been driven down as the Bank of England has cut interest rates, according to a recent survey by Barclays Stockbrokers.
