The popularity of stocks and shares Isas fell in the 2018-19 tax year as savers opted for cash, according to the latest statistics.
Around £67.5bn was subscribed to Isas in 2018-19, according to data from HM Revenue & Customs, an increase of £2.3bn compared to the previous year.
The data showed the increase was driven by the £7.3bn rise in cash Isa subscriptions, from £36.6bn in 2017-18 to £43.9bn in 2018-19.
Meanwhile, the amounts subscribed to stocks and shares Isas fell by £5.2bn, from £27.8bn in 2017-18 to £22.6bn in 2018-19.
The number of cash Isas subscribed to in the 2018-19 tax year increased by 1.4m from the previous year, to 8.4m.
Meanwhile, the number of stocks and shares Isas fell by 450,000, from 2.87m to 2.42m.
Zena Hanks, partner in the private wealth team at Saffery Champness, said: “For many years financial advisers have been recommending that individuals make the most of the tax relief guaranteed through their annual Isa allowances, and it seems that, in the case of cash Isas at least, this message is being received.
“When it comes to the figures for stocks and shares Isas, the decline in the number and total value of subscriptions may be a reflection of the economic uncertainty surrounding the Brexit process, which had a significant impact on the markets in 2018-19, and may have encouraged savers to stick to cash Isas in order to avoid the volatility that comes with investing in the stock market.”
Rachael Griffin, tax and financial planning expert at Quilter agreed that the increase in the use of cash Isas may have been caused by the “politically turbulent period” resulting from Brexit, which could have “forced people to take lower risks with their savings as they were scared of volatile stock markets”.
Ms Griffin added that following the coronavirus, “some of these savers may have felt that their decision has been vindicated”.