New ISA rules will come into force from next spring under Andy Burnham's government, slashing the cash ISA limit from £20,000 to £12,000. The change comes as new figures reveal that the number of ISA millionaires has jumped by over 50 per cent in a single year.
The data, obtained from HM Revenue and Customs (HMRC) via a Freedom of Information (FOI) request by smart money app Plum, shows that as of April 5, 2024, an estimated 7,730 individuals held total ISA pots of £1 million or more. ISAs are Individual Savings Accounts that savers can put money away in without having to pay tax on the interest earned. There are four different types of ISA that adults can hold - cash ISAs, stocks and shares ISA, innovative finance ISAs and Lifetime ISAs - plus a Junior ISA for children under 18.
ISA millionaire figures
According to HMRC's latest response to Plum, the average ISA millionaire was sitting on a pot worth around £1,348,000 in April 2024. The mean average market value of the top 25 ISA millionaire holdings was £11,928,000, rounded to the nearest £1,000. The majority of ISA millionaires, at around 7,300, were sitting on amounts worth £1,000,000 to £1,999,999 in April 2024. Meanwhile, around 60 had pots worth £4,000,000-plus, with the average value of holdings among this group at £7,708,000.
HMRC also cautioned that figures should be used as a "guide" - as individual level ISA data is provided to it annually by ISA managers, however each year a proportion will enter records incorrectly, or fail to submit. ISAs enable savers to turbo-boost their funds as accounts that are ringfenced from tax.
New ISA limits from 2027
The figures emerge as Andy Burnham's government prepares to introduce a sweeping overhaul to ISA contribution limits from early next year, restricting how much under-65s can save in tax-free cash accounts. The plans were first unveiled by former chancellor Rachel Reeves during Sir Keir Starmer's premiership. Under the current rules, all adult savers have an overall ISA limit of £20,000 per tax year, which they can split between different types of ISA. At the moment, there is no limit on how much of your allowance you can have in Cash ISAs, but that will change next year.
From April 6, 2027, savers under the age of 65 will only be able to put away £12,000 in a Cash ISA. The £20,000 overall limit will remain, which means savers with the maximum £12,000 in a Cash ISA can still put away another £8,000 into other ISAs. The new limit will not apply to people aged 65 and over, who will continue to have an overall allowance of £20,000.
Industry reaction
Will Bryant, director of wealth strategy at Plum, said: "A jump of more than 50% in a single year is really telling." He said the ISA millionaires are not people who "suddenly saved" their way to £1 million. Highlighting the benefits of compound interest boosting pots over time, he added: "It's the result of years of patient investing, where the growth on your growth starts doing the heavy lifting. That's the bit people underestimate. These figures underline the value of investing and the importance of taking a long-term approach. Despite the geopolitical volatility of recent years, global markets powered by the US stock market have continued to climb."
Mr Bryant said the changes "may lead people to use more of their stocks and shares ISA to make full use of their tax-free allowance," but he added: "Many people simply won't know what's changing."
Figures released by HMRC in September showed around £135.7 billion was subscribed to adult ISAs in the tax year 2024-25 – a £32.7 billion annual increase. The £32.7 billion increase was driven by a rise in cash ISA subscriptions, which grew by 37.5% or £26.1 billion. Stocks and shares ISA subscriptions saw a 19.7% or £6.1 billion annual increase, and Lifetime ISA subscriptions had a 20.1% or £472 million rise.
Maike Currie, vice president of personal finance at PensionBee, said: "ISAs are one of Britain's great savings success stories. Their beauty lies in their simplicity: a straightforward, tax-efficient way for ordinary people to build wealth and take greater control of their financial futures. And you don't need to become an ISA millionaire to benefit."
Ms Currie said cutting the cash ISA allowance and introducing additional restrictions "risks making a simple product unnecessarily complicated, potentially undermining confidence at precisely the time we need more people saving and investing".
