Investors are continuing to practice ‘ISA dumping’ to maximise their annual allowance in a single transaction, abrdn wrap data shows.
According to the findings, 27% of new stocks and share ISA deposits on abrdn Wrap in the final week of the 2021/22 tax year had the maximum £20,000 paid in. This is similar to the 29% reported in 2021 and above the 20% recorded in 2020.
In March 2022, almost a third of new stock and share ISA deposits on the Wrap platform were filled completely, abrdn said.
Jonny Black, strategic director at abrdn, said: “This year’s trend in ‘ISA dumping’ is likely a result of advisers and their clients seeking to mitigate the impact of volatility that gripped markets in the first quarter of this year and waiting to see what would be announced in the Chancellor’s Spring Statement.
“While some clients may have been rushing to make the most of the year’s ISA allowance, in most cases this ‘rush’ will have been thoughtful, effective, tax planning in action. The strategy of filling ISAs last-minute will of course not be right for every client. Advisers need to ensure that paying in one go is right for a client’s appetite for risk, and in some cases, it will be better to feed funds in over a tax year to help mitigate exposure to market fluctuations.”
The data also revealed a 60% jump in the number of individuals with £1 million or more in their stocks and shares ISA between April 2021 and April 2022.
ISA millionaires were also more active with their investments, with greater year-on-year variation in the top ten funds where their assets were invested when compared to general ISA accounts.
Black added: “Larger and larger ISA pots will demand greater consideration from clients about the role they will play in their wider retirement plans – particularly when it comes to factors such as retirement and inheritance.
“Advisers will be perfectly placed to help clients determine how to put their pots to best use, and how to combine them with savings from other sources, such as a pension, to maximise advantages like income flexibility and tax efficiency.”
