ISA millionaires hit a record high of over 5,000, with some pots growing by more than £2m year-on-year

 ISA millionaire numbers have soared to a record high of 5,070, latest annual figures show.

A Freedom of Information (FOI) request by smart money app Plum has revealed the number of millionaires tracked by HMRC jumped almost 5% during the 2022-23 tax year from the 4,850 millionaires recorded the previous year (millionaire numbers are counted on April 5 each year).

According to HMRC’s data, the top 25 ISA investors are sitting on pots averaging an eye-watering £11,305,000 –up by £2.425m (27%) in the space of just 12 months.

Meanwhile, the average ISA millionaire is sitting on a pot of £1,346,000, virtually unchanged year-on-year.

Rajan Lakhani, of smart money app Plum, commented: “The ISA millionaire club just got bigger, with 220 new members joining its ranks thanks in     part to the US-driven AI-gold rush.

“Those at the top of the tree have – in some cases – seen their pots grow by more than £2m in the space of just 12 months, without a single penny of tax to pay on their gains.

“There’s no question that the rise of the so-called Magnificent Seven – Wall Street’s leading tech stocks including Nvidia – have helped balloon the pots of armchair investors here in the UK in recent years.

“So far, we see no evidence of that appetite for U.S. tech giants dampening. In fact, two thirds of our fund buy orders in Q3 were weighted towards the U.S. market or tech giants specifically.

“Looking at the picture more broadly since ISA millionaire numbers were first tracked in 2016, there’s only been a single annual dip recorded during that time, which was in 2020 when markets initially went into a major downturn at the beginning of the Covid-19 pandemic.

“Against that backdrop, the long-term trajectory for stocks has typically been one of continued elevation.”

ISA millionaire numbers have now increased by 1,026% since 2016 when they stood at just 450. 

Of the 5,070 ISA millionaires recorded in the figures published today, 4,800 investors were sitting on pots valued at £1m-£1,999,999, while 200 individuals had pots between £2m-£2,999,999 and 30 had pots £3m-£3,999,999. There were 50 investors with pots in excess of £4million.

The latest figures come as families brace themselves for inheritance tax on pensions from April 2027. ISA pots remain exempt from IHT if passed on to a spouse or civil partner of the deceased.

Rajan Lakhani said: “The flexibility and liquidity of the ISA have made it particularly attractive to younger investors, who don’t want to lock their monies away until their late 50s, which is the case with pensions.

“Moreover, the current government has made it clear it wants to foster a greater retail investment culture in the UK.

“In that arena, nobody is expecting changes to the tax-free status of ISAs themselves, or a change to the £20,000 allowance for stocks & shares ISAs.

“However, Chancellor Rachel Reeves is reportedly considering lowering the annual allowance for cash ISAs specifically, a proposal which is dividing public opinion sharply.” 

Individual Savings Accounts (ISAs) were introduced in 1999, replacing their predecessor Personal Equity Plans (PEPs) which were launched in 1987 by the then chancellor Nigel Lawson with an annual allowance of £2,400. PEPs investors were allowed to lump their money into the new tax wrapper. ISA holders can put their money in either cash or stocks & shares accounts.

While pension investors typically only have the option to withdraw a 25% lump sum tax free up to a cap of £268,275 and can’t touch their pot until aged 55 (or 57 from 2028 ), adult ISA investors can pay in £20,000 annually with all contributions and gains sheltered from income and capital gains tax – and draw on their pot whenever they want with no ceiling on tax free cash. 

The rise and rise of ISA millionaires

Year	Number of investors with £1m+
2016	450
2017	740
2018	1,190
2019	2,000
2020	1,480
2021	4,070
2022	4,850
2023	5,070

*Millionaire numbers counted by HMRC on April 5 each year

The Liberal Democrat peer Lord Lee of Trafford became the first publicly declared ISA millionaire in 2003 after judiciously maxing out his allowance from the time of their launch (as PEPs). 

Someone starting from scratch today, maxing out the current £20,000 annual allowance each year into a stocks & shares ISA could reasonably expect to reach millionaires’ row in around 22 years, assuming annualised returns of 7% after fees.

Rajan Lakhani said: “The roadmap to becoming an ISA millionaire involves starting early and investing consistently.

“We know from information previously released by HMRC that all ISA millionaires built their fortunes through stocks & shares investing.     

“And while the cash ISA won’t make you a millionaire, it serves a different function entirely, allowing you to build a rainy-day fund without exposure to the volatility of the stock market. Or it might fulfill a short-term need, allowing you to hold money for a major near-term purchase like a house without the threat of losing a chunk overnight before you complete the transaction.

“However, there’s no question that over the long-term, those who are prepared to embrace some risk by investing in a stock & shares ISA will typically reap greater returns. So      it’s important that people still have that choice and the government provides accessible incentives, information and guidance to people to invest if they want to, instead of punishing cash savers by reducing the Cash ISA allowance. 

“For those anxious about investing in the stock market, money apps like Plum allow you to invest in funds that diversify your investments across thousands of companies and enable you to select a risk profile that suits your personal outlook.

“These days, you don’t need to be a Master of the Universe to make a profit on Wall Street.”