This weekend marks 25 years since ISAs were first introduced. They have certainly proved popular with British savers, with more than 22 million adults holding around £750 billion in ISAs.
Recent cuts to Capital Gains Tax and Dividend Tax allowances have made ISAs more attractive as a way to shelter savings and investments from the tax man.
Laura Suter, director of personal finance at AJ Bell, said: “Changes to the ISA rules from this weekend 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.”
To celebrate ISA’s quarter of a century milestone, here are some top facts about the investment.
1.) Multi-billion investment
Nearly £750 billion is held in ISAs owned by UK adults, including £456 billion in stocks and shares ISAs and £285 billion in cash ISAs. A further £9 billion is held in Junior ISAs for children.
2.) 40% of the population have an ISA
Over 22 million adults hold an ISA, making up more than 40% of the population. There are over 6 million ISA users aged over 65, meaning half the population in this age group have ISAs. Almost a third (32%) of 18-25 year olds also have an ISA account, suggesting that ISAs are a popular way for the younger generation to start building up their savings and investments.
However, Suter believes more should be done to encourage others to invest.
“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.”
3.) How much are people investing?
Around 1.6 million ISA holders are maxing out the full £20,000 annual ISA allowance, equating to around 7% of all ISA holders. However, smaller amounts are much more common, according to HMRC’s most recent figures, with 47% of all ISA holders paying in £2,500 or less.
On average, a stocks and shares ISA will see double the annual investment compared to a cash ISA. Around a fifth (21%) of stocks and shares investors use the maximum ISA allowance a year.
4.) Average ISA investment
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. At the other end of the scale, under 25s hold an ISA with an average value of £6,398. This jumps to £23,826 for those aged between 45-54 and £38,257 for those in the 55-64 age bracket.
5.) 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 prefer cash ISAs. Over 40% of male ISA holders paid into a stocks and shares account, compared to just 26% of female ISA savers.
6.) Junior ISA holders
Over £9 billion is held in Junior ISAs, with 1.2 million accounts paid into annually. While the maximum yearly investment allowance stands at £9,000 the average amount paid in is a much lower £1,229. Mirroring 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 cash Junior ISAs (£856).
