ISA millionaires plunge but Britons could still achieve lofty goal

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According to the latest numbers, Britain now has 520 fewer ISA millionaires than last year. The drop has been attributed to a period of global stock volatility, as the markets go into retreat.

The data was obtained from HM Revenue and Customs (HMRC), following a Freedom of Information request by InvestingReviews.

The taxman explained ISA millionaire numbers had dropped to 1,480 from 2,000 the previous year.

ISAs are considered the best way to save tax-free, and each year millions of people will opt for them.

Perhaps the best way to amass wealth through an ISA is via a stocks and shares ISA, as it is believed all ISA millionaires are using this option.

However, with investing, it’s important to be aware capital is at risk of losing value.

Despite the drop in overall ISA millionaires, data shows the average millionaire pot has grown by seven percent.

It now stands at £1,513,000, propelling people substantially over the coveted £1million mark.

InvestingReviews asserts an investor starting from scratch today could expect to become a millionaire in about 22 years.

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This would be achieved by maxing out the annual ISA allowance of £20,000, and assuming an average annual compounded return of seven percent. 

Simon Jones, CEO of Investing Reviews, still has optimism towards ISA saving.

He anticipates this will be a minor blip, and recovery can be expected in the near future.

Mr Jones said: “We expect ISA millionaire numbers to rebound in the short to medium term as equity markets recover from a period of uncertainty.

“For investors with a long-term horizon, a stocks and shares ISA remains an excellent route to millionaires’ row.”

There are various ways for Britons to save, but ISAs are thought to have some of the best benefits given they are tax-free.

There are four key types of ISAs available:

  • Cash ISA
  • Stocks and shares ISA
  • Innovative finance ISA
  • Lifetime ISA

Britons will be able to put money into one of each kind of ISA each tax year, as long as they do not supersede the £20,000 allowance. 

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People do not pay tax on interest on cash in an ISA, neither do they pay income or capital gains from investments in an ISA.

Those who complete a tax return do not need to declare any ISA interest, income or capital gains on it.

ISAs can be secured from banks, building societies, credit unions and other financial institutions.

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