Are ISAs still worth it? The journey to becoming an ISA millionaire

Making regular contributions to your ISA could add up over time, potentially creating a tax-free portfolio valued at £1 million or more

09 May 2025
  • Emma Sterland
Emma Sterland
Authors
  • Emma Sterland Emma Sterland
Young Woman Saving Money In Purple Piggy Bank At Home

Investing wisely is a cornerstone of financial success and for those who can afford to maximise their annual ISA allowance, the rewards could be substantial. Here, we explore how an investor could become an ISA millionaire, highlighting the benefits and considerations.

Are ISAs still worth it?

The annual ISA limit of £20,000 may seem low compared to the total value of your portfolio. However, ISAs have many benefits that make them a good choice for a lot of investors.

  1. Tax-free growth: One main benefit of ISAs is that all returns are tax-free. This includes interest, dividend and capital gains tax (CGT). This can significantly enhance the overall growth of your portfolio, especially over the long term. With the reduction in the CGT allowance over the years (currently £3,000), a limited savings allowance of £1,000 for basic rate tax payers, £500 for higher rate and zero for additional rate, and recent changes to inheritance tax (IHT) for pensions, now could be good time to utilise your ISA allowance  
  2. Flexibility: There are many different types of ISAs all with different allowances and rules. These include cash ISAs, stocks and shares ISAs, lifetime ISAs and innovative finance ISAs. This variety along with your choice of ISA and non ISA investments can help you to tailor your investment strategy to your level of risk tolerance and financial goals  
  3. No upper age limits: Unlike some other investment vehicles, cash and stocks and shares ISAs do not have upper age limits, making them available to a wide range of people  

Becoming an ISA millionaire through consistent contributions

By consistently contributing the current maximum ISA annual allowance of £20,000 into a stocks and shares ISA, you could benefit from compound growth to build a substantial and tax-efficient portfolio over time. Compounding allows your investments to grow exponentially, as the returns generated each year are reinvested and continue to earn returns themselves. Assuming you contribute £20,000 a year and an annual growth rate of 5%, you could become an ISA millionaire in approximately 25 years.

Having a tax-free portfolio worth over £1 million is highly beneficial for anyone.

Please note, this example is for illustrative purposes only and is not guaranteed. Additionally, this example does not take fees into account. The assumed growth rate is not guaranteed and it could take you longer than 25 years to have a stocks and shares ISA valued at £1 million.

Considerations and risks

While the potential for tax-free growth is enticing, it's crucial to remember that investments in stocks and shares ISAs are subject to market fluctuations. The value of your investments can go up and down and there is always the risk that you may get back less than you invested. It’s important to view your ISA investments within the context of your overall financial plan and have a clear understanding of the risks involved.

Potential changes to ISA allowances

It's important to remember that the government reviews and changes ISA allowance limits from time to time. This means ISA rules along with their tax treatment could be subject to change. Future changes could affect your investment strategy.

 
Chancellor Rachel Reeves’s documents following the Spring Statement 2025 confirmed that the government is looking into options for reforming the current ISA regime¹. While no immediate changes were announced, the possibility of adjustments highlights that now could be a good time to maximise your ISA contributions. By contributing £20,000 now, you can take full advantage of the current situation before there are potential changes.

How Evelyn Partners can help

Maximising ISA contributions can be a powerful strategy for building substantial, tax-efficient wealth. Some key aspects of successful ISA investing lie in:

  • Making consistent contributions
  • Making those contributions at the start of the tax year
  • A well-diversified portfolio that is in line with your attitude towards risk
  • A keen awareness of market dynamics and regulatory changes or ongoing advice to support you with this

Many investors do not have the time or the inclination to manage their wealth and investments effectively. This means that their ISAs may not provide the same level of returns that they could under professional management.

At Evelyn Partners, we provide combined wealth management, where a financial planner and investment manager work together to ensure that your:

  • Investment strategy satisfies your financial planning needs
  • Financial plan complements your investment portfolio
  • Investments are aligned with your overall, long-term financial goals and approach to investment risk in a coherent and integrated plan

By having two specialists working together, you could achieve better outcomes for your ISA as well as your long-term financial plan. A financial planner creates your strategy and structures your assets, potentially including an ISA, and your investment manager will build your portfolio, including those investments held within an ISA.

Speak to Evelyn Partners about ISAs

Investing in ISAs is not just about the numbers. It's about making informed decisions that align with your financial goals and risk tolerance. To find out more about how ISAs can play a role in your financial plan, speak to your usual Evelyn Partners contact or book an appointment online.