Record number of savers become 'Isa millionaires' after Brexit stock market boost

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A growing wave of so-called “Isa millionaires” have accrued such vast amounts via the accounts that they are able to use them to enjoy tax free six-figure incomes Credit: Hans Punz,

The number of savers with £1m or more in Isa accounts has "exploded" in recent months, with the UK's biggest stockbroker reporting the number on its books has tripled over the past year.

A growing wave of so-called “Isa millionaires” have accrued such vast amounts via the accounts that some are able to use them to enjoy tax free six-figure incomes.

Unlike pensions, where savers pay income tax on money paid out, savings withdrawn from Isas can be received tax-free. 

Savers who have become Isa millionaires have seen their fortunes boosted primarily by soaring stock markets, with the FTSE 100 reaching record highs following the UK's vote to leave the EU last year.  

Over the course of the 2016/17 tax year, the FTSE All Share index - which broadly represents the UK market - returned 22pc including reinvested dividends.

Their fortunes have also been helped by generous new Isa allowances introduced by the Conservative government, with the annual limit for stocks & shares Isas rising from £7,200 in 2010 to £20,000 today.

To amass a fortune as large as £1m they will also need to have followed a strict saving regime spanning across several decades. 

Britain’s largest broker, Hargreaves Lansdown, told the Daily Telegraph it now has 91 customers with more than £1m in an Isa, up from 26 in April 2016. And Barclays, another major broker, reported it now has 154 Isa millionaires, up by nearly 50pc from 83 a year ago.

A spokesman for the bank said: “We can attribute this increase in part to record levels of UK markets. Our customers’ portfolios are predominantly invested in UK equities, so they have risen as a result.”

Despite numbers rapidly increasing Isa millionaires remain an elite club, numbering fewer than 1,000 people.  

The Conservatives have made multiple increases to the Isa savings allowances, boosting wealthy savers' potential to grow wealth Credit:  Ben Lack

Jonathan Watts-Lay, of financial education provider Wealth at Work, said: “There are more people who will pay into Isas and in larger amounts. One of the key drivers is people reaching their pension limits - either annual or lifetime.

“In some cases, employers are giving them money that otherwise would have been paid into a pension but can’t be, to do whatever they want with. The wisest thing to do with that is use up as much of the Isa limit as possible each year.”  

Those starting an Isa today and able to make substantial contributions will need only average investing success to reach millionaire status.

For an individual investing the full £20,000 Isa allowance at the start of each year, it would take 22 years to become an Isa millionaire assuming 7pc annual growth, calculations show. 

Someone able to save £10,000 annually, again assuming 7pc annual growth, could become an Isa millionaire in 30 years.

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