ISAs total value jumps to £208bn

ISAs, which let people avoid income or capital gains tax on their savings, have shot up in value in recent years.

Their total value has risen sevenfold from £29bn since 1 April 2000.

It means that almost as much is held in ISAs as is owed by people on credit cards and other forms of non-mortgage debt, such as bank loans.

The Bank of England recently reported that such debt in the UK stood at £216bn.

Fresh investment

The increase in the value of ISAs is due to two things.

The first is the investment return on the cash accounts and the stocks and shares in which the savers' money has been invested.

The other factor is the amount of fresh money invested each year, offset by people withdrawing their money to spend or save elsewhere.

For several years, fresh investment was steady, at around £28bn each year.

But in the past couple of years that has risen, to £33bn in the 2006-07 financial year.

New rules

More than 17 million people currently have an ISA account, of whom 13.6 million made fresh contributions last year.

"A quite high proportion of the adult population has bought into the tax advantages of using an ISA each year," said Tom McPhail of stockbrokers Hargreaves Lansdown.

Currently someone can invest

• £3,000 each tax year in a cash mini-ISA
• £4,000 each tax year in a stocks and shares mini-ISA
• or £7,000 each tax year in a maxi-ISA, of which up to £3,000 may be in cash.

From April next year, that structure will change.

People will be allowed to save up to £3,600 in a cash ISA and up to £7,200 in a stocks and shares ISA, within a higher overall annual savings limit of £7,200.

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