The UK now boasts 2,000 ISA millionaires – and the top 60 have pots averaging a whopping £6.2million, official data has revealed for the first time.
HMRC opened its ISA millionaire files following a series of Freedom of Information (FOI) requests by InvestingReviews.co.uk.
Previously unpublished documents reveal there are 2,000 ISA millionaires in the country “to the nearest 10” with average holdings of £1,412,000.
Total ISA millionaire holdings in the UK now stand at £2.8 billion, meaning annual tax free returns to those lucky investors would be more than £200 million-a-year assuming 7% annualised growth.
There are 60 investors in the £3 million+ bracket with the average pot among them standing at £6,199,000.
A Stocks and Shares ISA holder with a £6 million fortune would expect to rake in around £434,000 tax free annually.
Meanwhile, a PAYE employee would need a gross salary of approximately £842,000 to take home the same sum after paying income tax, national insurance and pension contributions.
While HMRC would not reveal the size of the country’s largest pot, the data suggests it is likely there are a handful of “ISA beasts” sitting on pots in excess of £10million.
| Pot | Investor numbers | Average market value |
|---|---|---|
| £1m-1,999,999 | 1870 | £1,227,000 |
| £2m-2,999,999 | 80 | £2,366,000 |
| £3m plus | 60 | £6,199,000 |
Though investor platforms like AJ Bell and Interactive Investor have published their own internal ISA millionaire statistics in the past, this is the first time collated nationwide data has been released by HMRC.
The release comes as we approach “ISA season” – the period when savings providers seek to attract investors who have not yet used their annual tax free allowance.
All 2,000 ISA millionaires are believed to be Stocks & Shares ISA holders. Investors starting from scratch today could expect to reach millionaires’ row in around 22 years by maxing out their £20,000 annual allowance assuming a compounded 7% annual return. However, it would take approximately 34 years to accumulate a £3 million pot, and 44 years to join the £6 million club.
Given ISAs were only launched (as PEPs) by Nigel Lawson in 1987 with just a £2,400 allowance, the data released by HMRC indicates a small number of investors have benefited from supercharged returns over the years.
Among them is Liberal Democrat peer Lord Lee of Trafford who became the UK’s first ISA millionaire holder in 2003 after judiciously maxing out his ISA allowance from the time of their launch.
In a 2015 interview with The Financial Times he revealed his ISA had swelled to £4.5 million. While too modest to reveal his current pot, he is believed to be near the top of the tree.
Currently, there are around 2.7million S&S ISA holders of which 37 per cent are maxing out their allowances.
Millionaire ISAs: How long to save and how they grow
| Pot | Years to save | Expected annual tax free returns | PAYE equivalent |
|---|---|---|---|
| £1million | 22 | £70,000 | £117,000 |
| £2million | 29 | £140,000 | £258,000 |
| £3million | 34 | £210,000 | £395,000 |
| £6million | 44 | £434,000 | £834,000 |
Simon Jones, CEO of InvestingReviews.co.uk, commented: “This is the first time we’ve seen an official breakdown from HMRC on ISA millionaire numbers and it makes for fascinating reading.
“As ISA season takes off, this data will focus minds on what can be achieved through patient investing.
“Hats off to all those canny investors who have grown their pots to £6million plus. They will be raking in almost half a million pounds a year in tax-free cash, while anyone who did so without the ISA wrapper will be getting a spanking from the taxman.”
Dan Lane, Senior Analyst at Freetrade comments: “Hitting the seven-figure mark in your stocks and shares ISA is a pretty remarkable achievement. But, a bit like the most successful artists, sportspeople and business tycoons, getting there is all about doing the simple stuff well and consistently.
“Even if a £1m ISA isn’t in your future, the basic habits of monthly investing in a diversified portfolio informed by your financial goals still matters more than the amount in there.
“Z-list celebs are enough evidence that focusing too much on the big prize and not enough on the groundwork makes for an unconvincing journey.”
Laura Suter, head of personal finance at AJ Bell comments: “Getting to ISA millionaire status is no mean feat, so the fact that 2,000 investors have managed to achieve this accolade is very impressive. The investors in this sought-after club will have had a combination of maxing out their ISA allowance each year but also some very generous investment returns.
“Someone who put the full allowance in their ISA each year since their launch in 1999 and who earnt a steady 5% return a year would have built up a pot of just over £441,000 – not even close to being an ISA millionaire. Even if we include someone who had started saving in ISA’s forerunner – PEPs – and had saved the full limit each year since PEPs launched in 1987, getting that same 5% return a year, they would only have built up almost £708,000 in their pot.
“Everyone would like to go back in time and invest in the kind of things that the top 60 club of ISA investors who have £6.2m on average in their pots put their money into. If we assume they started when ISAs launched and put the full allowance in, they’d have to have earnt 25% returns a year on average every year since then. Even if we include PEPs they’d still have to have achieved returns of 15.5% every year to get to a pot of £6.2m today. In reality these investors probably made a few very savvy bets that rose dramatically in value and a few more stable returners.
“While it’s definitely easier to become an ISA millionaire today, with a generous £20,000 a year allowance for savers (assuming you have the money spare) the limit when ISAs launched in 1999 was just £7,000 – so past investors would have to have generated larger returns than today’s investors to make it into the elite ISA millionaire club.”
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