Almost £900bn is held in ISAs by UK savers, as the market gets closer to reaching the milestone of £1trn, AJ Bell has revealed.

The investment platform’s analysis of HMRC’s 2023/24 data found that over 20 million adults hold an ISA, with around 3.6 million holding both stocks and shares and cash accounts.

Around 40% of Brits hold an ISA, with 25% of adults under 25 using an ISA to save and invest.

AJ Bell found that while the number of people who use the full £20,000 ISA allowance surged to almost 2.5 million in 2022/23, most pay far less, with over 40% contributing less than £2,500.

Pensions and savings expert at AJ Bell, Charlene Young, described ISAs as an “astonishingly popular savings and investment product”, with millions of account holders taking advantage of the tax perks.

She concluded: "There is now close to £900bn held by Brits in cash and stocks and shares ISAs, plus a further £12bn in Junior ISAs, as the UK closes in on a £1trn ISA market. The lag in HMRC’s data means we could actually be there already.

"With over half a trillion pounds invested in stocks and shares ISAs, most ISA wealth is invested for the long term. While investments dipped during the COVID pandemic, bullish markets and continued contributions have seen stocks and shares ISA wealth surge, with the total value of investments more than doubling in a decade from £241bn in April 2014 to £511bn in April 2024."

However, over £100bn is held in cash ISAs by three million individuals who have £20,000 or more but not in a stocks and shares ISA. This figure includes a million who have £50,000 or more in cash ISAs but don’t invest.

Following the publication of this data, the investment platform has called on the Government to focus effort on encouraging those people have cash ISA balances of over £20,000 and who do not have stocks and shares ISA to invest, if they want to promote a "healthier long-term investing culture" and help more people unlock the potential to grow their wealth.

Young concluded: "Although Government has missed the opportunity to reform the ISA market to make investing easier and help remove barriers between saving and investing, the figures demonstrate that ISAs continue to be astonishingly popular with savers and investors looking to shelter their wealth from tax."

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