New data from abrdn highlights last-minute filling of stocks & shares ISAs, and a year-on-year rise in the number of ISA millionaires
New data from abrdn has revealed the continued practice of ‘ISA dumping’ in the final days of the 2021/22 tax year – the process of opening and filling an ISA account to its maximum annual allowance in a single transaction.
More than a quarter (27%) of new stocks and shares ISA (S&S ISA) deposits on abrdn Wrap in the final week of last tax year had the maximum £20,000 paid in. This compares to 29% in 2021, and a fifth (20%) in 2020.
In March 2022, almost a third (31%) of new S&S ISA deposits on the Wrap platform were filled completely. This was an increase on the 21% of accounts opened and fully filled in February 2022, and marginally less than the proportion opened and filled in the month of March 2021 (33%).
Jonny Black, strategic director at abrdn, Adviser, said: “This year’s trend in ‘ISA dumping’ is likely a result of advisers and their clients seeking to mitigate the impact of volatility that gripped markets in the first quarter of this year, and waiting to see what would be announced in the Chancellor’s Spring Statement.
“While some clients may have been rushing to make the most of the year’s ISA allowance, in most cases this ‘rush’ will have been thoughtful, effective, tax planning in action.
“The strategy of filling ISAs last-minute will of course not be right for every client. Advisers need to ensure that paying in one go is right for a client’s appetite for risk, and in some cases, it will be better to feed funds in over a tax year to help mitigate exposure to market fluctuations.”
abrdn’s data also revealed a 60% increase in the number of stocks and shares ‘ISA millionaires’ – individuals with £1m or more in their S&S ISA – in accounts invested in Wrap between April 2021 and April 2022.
ISA millionaires were also more active with their investments, with greater year-on-year variation in the top ten funds where their assets were invested when compared to general ISA accounts.
Jonny Black added: “Larger and larger ISA pots will demand greater consideration from clients about the role they will play in their wider retirement plans – particularly when it comes to factors such as retirement and inheritance.
“Advisers will be perfectly placed to help clients determine how to put their pots to best use, and how to combine them with savings from other sources, such as a pension, to maximise advantages like income flexibility and tax efficiency.”
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Notes to Editors
At abrdn, our purpose is to enable our clients to be better investors.
abrdn plc manages and administers £542 billion of assets for clients, and has over 1 million shareholders. (Figures as at 31 December 2021)
Our business is structured around three vectors – Investments, Adviser and Personal – focused on the changing needs of our clients.
For UK wealth managers and financial advisers, we provide technology, expertise and support to make it easy for them to run their businesses – and to deliver the outcomes their clients want.
We offer content and experiences that can be personalised to suit every type of business and client, giving advisers powerful data and insight to make better decisions.
We’re the number one adviser platform business in the UK for assets under administration and gross flows (Adviser AUA: £76 billion as at 31 December 2021).
We’re also the first UK adviser platform provider to receive and retain an ‘A’ rating from AKG for the financial strength of our platforms (AKG financial strength reports 2021).
Tax rules can change in the future and individual circumstances and where they live in the UK could have an impact on tax treatment. The value of investments can go down as well as up, and may be worth less than originally invested
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