The Isa turns 18: how it's changed since 1999

6 April 2017

Today marks a significant date for the much-loved Isa (Individual savings account) – as well as being the start of the 2017/18 financial year, it’s also the day the Isa turns 18. So don’t be surprised if you see one stocking up on cheap supermarket wine later tonight.

The Isa was created in 1999, replacing the Personal Equity Plan (PEP) and Tax-Exempt Special Savings Accounts (TESSA) – the former being similar to a Stocks and Shares Isa and the latter today’s Cash Isa.

What is an Isa?

An Isa is a savings account you can put money into without having to pay tax on anything that money earns – be that in the form of interest, dividends or capital gains. This is why the Isa is often referred to as being ‘tax-efficient’.

There are different flavours of Isa, each designed to suit a host of requirements. These are as follows:

Russell Warwick, direct to consumer director at Prudential UK, says: “With over two fifths of UK adults currently subscribing to an Isa, the Isa market has now grown to be worth over £470 billion, with further growth anticipated as the ISA allowance continues to rise.

“ISAs can play an important part in retirement planning alongside pensions; and, in addition to the tax advantages, offer investors flexible access to their savings. We fully expect these popular tax-free savings and investment accounts to be equally successful in the 18 years to come.”

Find out more about using an Isa as part of your retirement plan with our article Use an Isa to boost your retirement fund.

How Isas (and the financial world) have changed

When Isas first arrived, the maximum you could put into a Cash Isa was £3,000. Today the amount is £20,000 (up from £15,240 in the 2016/17 tax year).

Prudential has also found that upon their launch, 5.9 million people used Cash and Stocks and Shares Isas – 13% of UK adults. That’s now grown to 12.7 million people, meaning a quarter of UK adults have one.

Other elements of our finances Moneywise found that have changed since 1999 include:

  • The average UK house price was £74,000. In 2016 this was £219,554.
  • The price of an internet-enabled mobile phone was £370. In 2016, you could pick one up for a tenner.
  • Three years’ worth of tuition fees at university would amount to £3,000 if your family earned over £35,000 per year. Today you would be charged up to £27,750.
  • The minimum wage was set at £3.60 an hour (the UK’s first legally-binding minimum wage). Today, if you’re over 25, you’ll take home £7.50 an hour.


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