Budget sparks record number of top-ups for SIPPs, ISAs, JISAs and LISAs

28 October 2024 – Budget sparks record number of top-ups for SIPPs, ISAs, JISAs and LISAs

• The Budget has sparked a record tax year so far for the number of people paying into HL SIPPs, JISAs, and LISAs.
• For ISAs it’s second only to the peak of pandemic investment in 2022.
• The number of people maxing out their HL SIPP so far this tax year is up 69% in a year.
• The number of people maxing out their HL ISA so far this tax year is up 40%.
• The number of people maxing out their HL JISA so far this tax year is up 51%.
• The number of people using share exchange (Bed and ISA) with HL is up 44%
• The number of people maxing out their HL LISA so far this tax year is up 28%.

Sarah Coles, head of personal finance, Hargreaves Lansdown:

“The Budget has inspired a record-breaking six months for saving and investing, as people have been reminded just how valuable their ISA and pension allowances are, and rush to make the most of them while they know where they stand. It’s the biggest year ever for the number of people paying into their SIPPs, JISAs and LISAs, and the second biggest for ISAs – after the pandemic peak in 2022. It’s a great sign that people are taking sensible steps to prepare for whatever the Budget holds in store, and it’s not too late to get stuck in.”

SIPPS

Helen Morrissey, head of retirement analysis, Hargreaves Lansdown:

“We’re expecting a big Budget for pensions, with rumours flying thick and fast. Speculation started with suggestions of a move to a flat rate of tax relief – a shift that would work in favour of basic rate taxpayers but against those paying tax at a higher or additional rate.

We’ve seen signs that many SIPP holders have opted to make the most of their allowances while they can. Between 6 April and the 18 October, we have seen a 69% surge in the number of clients who have maxed out their pension contributions compared to the same period last year.

We also saw a 19% jump in those who chose to contribute exactly £3.6k to their pensions. Given that this is the maximum you can contribute to the SIPP of a non-working spouse or child, it could indicate that people are taking the opportunity to not just bolster their own pensions but those of their loved ones too.

Of course, the ability to make major pension contributions is only available to relatively few people, but the fact that so many more people are paying in whatever they can afford demonstrates a real drive to make the most of allowances as they currently stand to boost retirement planning. More recently the rumours suggest that the Chancellor has cooled on the idea of going to down the flat rate route, but now the suggestion that income tax thresholds could stay frozen for longer has reminded people of the benefits of tax relief on a SIPP all over again. Taking the opportunity to boost contributions is a clear no-regrets decision that will serve people well in future.”

ISAS

Sarah Coles

“It has been a massive six months for stocks and shares ISAs, as investors have faced dire warnings of tax rises in the Budget and sought sanctuary in tax free ISAs. We have also seen a flood of people using share exchange (Bed & ISA) to move investments into ISAs.

Rumours about potential capital gains tax rises will have been a major driver for both. By investing through a stocks and shares ISA, you can avoid CGT completely, both when you sell up and cash out and whenever you rebalance your portfolio. You also protect your investment from dividend tax, which hasn’t attracted much Budget speculation, but remains a key factor thanks to recent cuts in the annual allowance.

Share exchange, meanwhile, allows you to realise gains within your annual capital gains tax allowance of £3,000 by selling up and immediately buying back within a stocks and shares ISA. Investors who are sitting on large gains have the comfort of knowing that they’re doing what they can to eat into the gain using their annual allowances, and protecting that portion of their portfolio from CGT and dividend tax in future too.

There are also worries around rumours that the Budget could tweak the ISA allowance – and possibly introduce some kind of lifetime cap. For those investors who have the money available and were planning to invest in the current tax year, there has been an awful lot of comfort in being able to do so sooner rather than later, while they know where they stand.

JISAs

The 51% uplift in the number of people maxing out their HL JISA demonstrates a huge commitment to investing for children. The fact that the number making contributions of any size has risen by a third in a year indicates that this isn’t just a consideration for the very wealthy.

The Budget has helped drive people to invest for children, partly because worries about rising taxes will affect every member of the family in the long run, partly because giving this money away protects it from tax, and partly because JISAs can be so useful for gifting if you’re worried about inheritance tax. You can make gifts up to the annual allowance, or regular gifts from income and they’ll leave your estate immediately for inheritance tax purposes, and yet they are tied up until the child is 18.

There will also be those who are alarmed about reports that the inheritance tax rules around larger gifts (or potentially exempt transfers) may change, so that instead of being out of your estate after seven years it could take up to ten. They may have maxed out Junior ISAs to get the clock ticking on those gifts.

LISAs

LISA investors include younger people, saving for a property deposit, who have less wiggle room for extra investment. However, the number of those maxing out their LISA is up more than a quarter and the number making contributions is up over a fifth, so they’re clearly seeing the benefits of protecting their property nest egg from tax. Buyers may be putting their plans on hold to see what the Budget holds in store, but those who are still building their deposit aren’t hanging around in the race to get onto the property ladder.

There will also be those who are putting money away for retirement, who see the LISA as a useful way to ensure tax-efficiency of retirement savings outside a pension too. Budget speculation may have provided a handy reminder of just how valuable the LISA bonus is, so they’re keen to pocket this free money from the government at a time when they know the government is watching every penny.”

All comparisons are to the same period a year earlier