Subscriptions to ISAs – tax-free savings accounts – are at record levels since the scheme was launched in 1999, with over £45billion now invested.

The Tax Incentivised Savings Association (TISA) said the HMRC figures for the full financial year 2009/2010 showed that £32.5billion is now invested in cash ISAs and £12.5billion in stocks and shares ISAs.

The amount of money invested in cash ISAs has increased for the third year in a row but there was a slight decrease in the number of cash ISA accounts opened in 2009/2010 compared to the previous year.

The amount subscribed to stocks and shares ISAs jumped by 29 per cent on the previous year, with the number of accounts being opened increasing by 2 per cent.

Cash ISAs are tax-free savings accounts where capital is protected and a limit applies to how much can be invested in a tax year.

Stocks and shares ISAs have a higher limit for the amount that can be invested and can include various products which offer different levels of risk for how money is invested.

Commenting on the figures, George Ladds, head of investment and pension research at Fair Investment Company, said that due to the increase in the ISA allowance for this tax year, “it is no real surprise that there was an increase in the amount of money being invested into cash ISAs.”

Other reasons could include low savings rates, which could have increased the amount being paid into cash ISAs, while stocks and shares ISA investment could have been pushed up by stock market activity, Mr Ladds continued.

“There are many investment products available within an ISA wrapper, including relatively low risk investments, which tend to be the type of product people go for when they take their first step into investment.

“People are also starting to see ISAs more and more as a significant part of their investment portfolio, and realising their potential both as short term savings products and longer term investments to help fund retirement.”

In separate figures released on 31 August, the Financial Services Authority said  2.7 million retail investment product sales were reported between April 2009 and March 2010, a slight decrease on the previous year.

The figures included 1.4 million pensions and more than600,000 investments, which includes bonds and trusts.

The FSA  annual product sales data showed that 67 per cent of all retail investment sales were sold on an advised basis, while 93 per cent of bonds and 88 per cent of ISAs were sold with advice.

© Fair Investment Company Ltd