Tonight:
9°c
Plunge in Isa savers as the recession bites
Lucy Tobin27.03.09
With just one week to invest in an individual savings account (Isa) before the end of the tax year on 5 April, industry estimates suggest the number of tax-free Isas invested in stocks and shares has tumbled by almost 15%.
The Investment Management Association, which represents fund and pension managers, reports that 10.46 million Isa accounts were active in January 2009, against 12.28 million a year earlier.
Industry experts said the figures are not comprehensive but admitted the total amount of new money invested in Isas this year is likely to have fallen by up to 10% because of the recession. Even cash Isa accounts look unattractive as interest rates stand at 0.5%.
But while the average interest rate on a savings account is about 0.7%, the average cash Isa return is 2%. Revenue & Customs was unable to provide information about Isa sales for the current tax year. It stopped compiling quarterly data in April 2008, and now only produces annual figures each July.
A total of £35.7 billion was invested in 14.7 million Isa accounts in 2007-08.
