ISAs turn 25: Who holds them and how much have they got?

ISAs turned 25 on 6 April 2024 and they’ve never been more relevant, with cuts to capital gains tax and dividend tax allowances making the humble ISA an ever more valuable way to shelter savings and investments from the taxman.

On top of that the rise in interest rates has pushed far more people into using an ISA for their cash savings, with the accounts having fallen out of favour in recent years. The increase in cash interest coupled with more people being pushed into a higher income tax bracket means an increasing number of people are paying tax on their cash savings, which in turn has nudged more people to use an ISA.

Changes to the ISA rules from 6 April 2024 should make it easier for people to use ISAs and not get tripped up by the rules, which should mean people can shop around and engage with ISAs more.

The figures highlight that almost 60% of the population isn’t using an ISA at the moment, where they could potentially benefit from one.

Whether that’s people using a dealing account where they could be using an investment ISA, or people saving for children in a cash savings account where a Junior ISA might work better, or someone with old paper-based investments who could move them into an online ISA – there is clearly a gap where more people could benefit from ISA tax breaks.

How much are ISAs worth?

Nearly £750bn is held in ISAs owned by UK adults. That includes around £456bn invested in stocks and shares ISAs, and £285bn in cash ISAs.

A further £9bn is held in Junior ISAs for children, with £5bn in investment accounts and £4bn held in cash.

Source: AJ Bell analysis of HMRC and ONS data

How many people have an ISA?

There are over 6 million ISA users age over 65, meaning half the population in this age group have ISAs.

However, there are plenty of young people using ISAs too. Almost a third (32%) of 18-25s have an ISA account, illustrating that ISAs are a popular way for young people to start building up their savings and investments.

Many younger people will be using Lifetime ISA (LISA) accounts to help them build a house deposit, with over £13bn paid into LISAs since launch in 2017.

Source: AJ Bell analysis of HMRC and ONS data

How much are people paying in?

Around 1.6 million ISA holders used the full £20,000 annual ISA allowance, according to HMRC’s most recent figures, equating to roughly 7% of all ISA holders.

However, most people pay in far smaller amounts – over 5 million people paid in £2,500 or less, with just less than half (47%) of all ISA subscriptions falling into this bracket.

On average, a stocks and shares ISA holder will invest double what a cash ISA saver puts into their account each year (see table). This in part reflects the fact that investors are much more likely to be using the maximum ISA allowance, with around a fifth (21%) paying in £20,000 a year.

Source: AJ Bell analysis of HMRC and ONS data

Average ISA value by age group

The average ISA account is worth over £30,000, although this varies significantly by age.

Half of over 65s in the UK hold an ISA, with an average value of close to £60,000 (£58,787).

Source: AJ Bell analysis of HMRC and ONS data

Gender investing gap

There are more female ISA holders than men, with 11.5 million women having an ISA account and 10.8 million men.

However, men are much more likely to be investing their ISA, whereas women tend to use cash ISAs.

Over 40% of male ISA subscribers paid into a stocks and shares account, compared to just 26% of female ISA savers.

Source: AJ Bell analysis of HMRC and ONS data

Junior ISA holders

Over £9bn is held in Junior ISAs for children across the UK, with 1.2 million accounts paid into annually.

While the maximum amount that can be paid in each year stands at £9,000, the average is much lower, at £1,229.

As with adult ISAs, those paying in larger sums tend to be investing, with a higher average contribution to a stocks and shares Junior ISA (£1,807) compared to a cash Junior ISA (£856).

Source: AJ Bell analysis of HMRC and ONS data

Background

Figures based on AJ Bell analysis of HMRC data published June 2023. Total values and subscriptions run up until 2021/22. Age and gender breakdown runs up until 2020/21.

Proportion of adult population holding an ISA estimated based on HMRC figures for total number of ISA holders, as well as Census and ONS data on population size.