25 years of ISAs: a quarter of a century of tax-efficient savings and investing
21 March 2024
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The end of the 23/24 tax-year also sees a significant milestone: 25-years of the Individual Savings Account (ISA).
With imminent changes and updates coming to one of the most used savings and investing accounts in the UK, now feels like a good time to take a step back to explore its origins and various iterations before examining its future.
So where does the ISA come from?
The ISA was introduced in 1999 by Gordon Brown to replace the Personal Equity Plans (PEPs) and Tax-Exempt Special Savings Accounts (TESSAs). However, their inception was met with mixed reactions.Investors, commentators, investment companies, and financial advisers were sceptical. The bone of contention was that ISA investment limits seemed less favourable compared to those that applied to PEPs (for investment) and TESSAs (for cash). The more modest ISA limit of up to £7,000 (with £3,000 as the cash element) was seen as an ‘attack’ on the savings industry.
Since then, the ISA has gone through various rounds of tweaks and changes to become a stalwart of the financial planning process, undoubtably helping millions to save and invest.
As of the end of the 21/22 tax-year, £741.6 billion was held in ISA accounts with 62% of that held in stocks and shares.
Find out how the ISA has evolved over the years and what could be in store for its future.
