Isa investments are set to soar by an estimated £38.2bn as savers look to reap the benefits of a new, higher tax-free allowance, according to CoreData Research.
In its latest report on the buying behaviour and distribution of Isas, the firm said that the total value of cash Isas is on course to increase by 87.1 per cent to £72.6bn for the 2014/2015 tax year – assuming customer numbers remain consistent with HMRC account holding figures.
Stock and share Isas are also set for a rise in sales, of approximately £4.4bn on last year’s figure of £18.4bn.
Craig Phillips, head of international at CoreData Research, said: “Despite the low rates offered in cash Isas, many people are still fixated by the notion of their money sitting in cash.
“Is this a failure of the funds industry or a mentality of putting money under the mattress by consumers?”
This comes as the government announced its intention to remove the £10bn limit on the National Savings & Investments pensioner bonds. Under the new rules, more pensioners can apply for the bonds until 15 May – a week after the general election.
Robin Sainty, chartered financial planner at Norfolk-based Nurture Financial Planning, said: “A lot of people had their fingers burned during the credit crunch and they don’t want to let that happen again, so they opt for the low-risk option.
“It is a terrible shame because people are potentially losing out on a lot of money.”