Isa popularity outstrips Tessas

By THIS IS MONEY
Updated:

 

Individual Savings Accounts (Isas) are proving more popular than Peps and Tessas, according to official figures on Isa sales. Inland Revenue figures show Isas pulled in funds of almost £12.7 billion, with more than 5.1 million accounts opened in the first six months since the accounts were launched.

The cash total invested is around 40% more than was invested in both Personal Equity Plans (Peps) and Tax Exempt Special Savings Accounts (Tessas) in the same period last year. Isas replaced Peps and Tessas in April this year.

Investors in Individual Savings Accounts can put their money into a mix of interest-earning cash deposits, shares, and insurance policies. The income and any capital gain are tax free. The figures come as a welcome boost of the government's Isa scheme which has been criticised by some investment companies for being too complicated for ordinary investors.

Commenting on the latest figures Melanie Johnson, economic secretary to the Treasury, said: 'This is another splendid set of figures for Isas. In particular there has been a very encouraging growth in stocks and shares Isas. They are now running almost level with cash Isas.'

The £12.7 billion savings total includes £6.4 billion cash, of which £2.3 billion is invested with building societies. Adrian Coles, director general of the Building Societies Association, said: 'Building societies are continuing to outperform in this market, taking 36% of the amount invested in cash Isas - double their natural share of the deposit market as a whole.'

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