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Equity ISAs attract investors and savers

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Increasing numbers of savers, faced with the prospect of impoverished rates of return from savings accounts, are planning to put their money into stocks and shares ISAs, according to research.

With the new tax year looming on 5 April, a study carried out by Schroders, the asset management company, found that as many as a million people could be planning to invest in equity ISAs.

More equity ISA accounts were opened last year than for almost a decade. While in the first few months of 2011, twice as many accounts were set up compared with the same period a year ago.

The figures show a marked turnaround in the popularity of equity ISAs, which, for the previous couple of years, suffered as worries over stock market values grew during the height of the global financial crisis.

Individuals can invest up to £10,200 in an ISA account, with the maximum allowed for a cash ISA being limited to half that amount. Savers who choose ISAs benefit from income tax and capital gains tax breaks.

Robin Stoakley of Schroders said: “The appetite for stocks and shares ISAs is understandable given the paltry returns currently available on cash deposits and the fact that rates for conventional annuities are falling.

“Increasingly investors are turning to ISAs as a means to provide additional income to supplement rising living costs as well as to provide long-term capital growth.”