HMRC says there are now 3,180 ISA millionaires and you could be one by 2043

The number of people with ISAs worth more than £1 million has increased to more than 3,000, according to Freedom of Information data obtained by investment platform InvestEngine. The latest figures from HM Revenue & Customs show there are now 3,180 ISA millionaires in the UK.

The figures mean that a total of 253,000 people now have at least £250,000 in their ISAs, with a combined total value of at least £63 billion in their accounts. According to the latest HMRC figures, the total market value of ISAs in the UK is £725 billion, with approximately 22 million people now having an ISA account.

The findings come during October, which marks the midpoint of the tax year and the reset of ISA limits in April next year. InvestEngine is urging those who have savings set aside in low or no-interest accounts to consider putting them into ISAs now, where they can begin accruing returns that would be missed if left until the end of the financial year, while also shielding it from potential tax.

Andrew Prosser, Head of Investments at InvestEngine, said: “The number of ISA millionaires has increased significantly over the past few years, but we can be confident that most people with really big sums are stocks and shares rather than cash ISA holders.

“That is because, even someone who has put the maximum in a cash ISA every year since they were launched in 1999 would be at around £275,000 – a great sum, but well short of millionaire status.

“In contrast, more than 3,000 people have become millionaires through their stocks and shares ISA, and a further 30,000 have built up more than £500,000 for their futures.”

While HMRC data shows that cash ISAs are more than twice as popular as stocks and shares ISAs, the potential for growth is considerably higher in a stocks and shares ISA. Over the past decade, the average annual return on stocks and shares ISAs has been 9.64%, while over that same period, the return for a lower-risk cash ISA has been just 1.21%.

If these averages continue into the years to come, those who put away the maximum ISA amount into a stocks and shares account could be an ISA millionaire by 2043 - 19 years from now. By comparison, it would take someone with a cash ISA earning the average rate of interest until 2063 - an extra 20 years - to reach the millionaire milestone.

Even if average investment returns fell to 5% a year, stocks and shares ISA holders would still become an ISA millionaire within 25 years and still 14 years faster than a cash ISA holder. Even to achieve lower ISA milestones, the gap between those who put away the maximum amount into their cash and stock and shares ISAs account each year also differs significantly.

To help investors understand how regular investing could help grow their wealth over time, InvestEngine recently launched its Regular Investing Calculator, allowing anyone to understand how much they may need to invest over what time period in order to achieve their financial goals.

Years to reach ISA milestones by maxing yearly contributions via cash (avg. 1.2%) and stocks and shares (avg. 9.64%)

Prosser added: “For those looking to grow their long-term wealth, a stocks and shares ISA has been shown to be the most effective way to make your money go further and reach those big milestones years earlier than with a cash ISA. While not everyone will be able to put away this type of money each year, it shows the importance of thinking about the long run with investments and the power of compounding.

“Getting started early each year, even with just small amounts, and not leaving investing until the end of the tax year, creates the potential to grow large sums for later in life”