ISAs creating more millionaires than the lottery, HMRC data shows

The National Lottery has created approximately 7,700 millionaires across all its games since launching in 1994.

However, when investors with portfolios just below the million-pound threshold are included, the number of ISA millionaires is expected to rise significantly in the coming years.

Analysis of the HMRC figures suggests the number of ISA millionaires could climb sharply to around 40,000 within the next decade.

HMRC records show that beyond the confirmed millionaires, a further 2,770 investors hold ISA portfolios valued between £900,000 and £999,999.

These investors are within close range of the seven-figure threshold and could reach millionaire status with continued investment growth.

The figures reflect ISA balances as of April 5 2023, meaning subsequent stock market performance may already have pushed many of these portfolios above £1million.

Global tracker funds that follow indices such as the Ftse All World Index have delivered compounded returns exceeding 50 per cent since that point.

This level of market growth suggests that a large share of the 4,700 savers with portfolios valued between £800,000 and £899,999 may also have crossed the millionaire threshold.

More broadly, the data shows nearly 60,000 ISA investors currently hold portfolios ranging from £500,000 to just under £1million.

Rajan Lakhani said the figures demonstrate how tax-efficient investment accounts have become a major route to building long-term wealth.

"Few people could ever have imagined that when the ISA launched, it would one day be creating tens of thousands of millionaires and changing more lives than the National Lottery.

"But this is exactly the scenario that's on the horizon according to HMRC's own numbers, even allowing for the kind of stock market dips which are part and parcel of the investing cycle."

Assuming continued investing and annualised compound growth of seven per cent, many of the 60,000 savers holding substantial six-figure ISA portfolios could reach millionaire status within the next ten years.

Even when accounting for natural attrition within the investor base, projections indicate that ISA millionaire numbers are likely to increase significantly over time.

Individual Savings Accounts were introduced in 1999 to replace Personal Equity Plans, which had originally been launched in 1987 by former chancellor Nigel Lawson with an annual allowance of £2,400.

Over the following decades the scheme has become one of the UK’s most widely used tax-efficient savings vehicles.

John Lee, Baron Lee of Trafford became the first publicly acknowledged ISA millionaire in 2003 after consistently maximising his contributions from the scheme’s launch.

From April 2027, however, cash ISAs will face a reduced annual ceiling of £12,000 as ministers attempt to encourage greater participation in stock market investment.

Mr Lakhani said investors who had reached seven-figure portfolios had typically done so through market-based investments.

"ISA millionaires have one thing in common: they all built their fortunes through stocks & shares ISAs."

He added that while cash ISAs can serve as a vehicle for emergency savings or major purchases, they are less likely to generate millionaire-level returns over a typical lifetime.