UK ISA savings are forecast to hit a £1 trillion milestone this tax year, with savers expected to stash a record amount in their tax-free savings, according to Lloyds.
Lloyds estimates that UK savers will put a record £115 billion into ISAs this tax year, with over £85 billion going into cash savings alone as savers make the most of their cash ISA allowance before it is reduced to £12,000 from 2027.
The figures for cash ISAs show the net amount saved, i.e. total deposits after withdrawals, is expected to be in the region of £55 billion. This would see the total value of savings currently in cash ISAs exceeding £450 million.
Meanwhile, the most recent data from HMRC (2023/24) shows the value of stocks and shares ISAs was £511 billion. With another two years’ deposits and modest investment growth, that value is likely to stand at more than £600 billion by the end of this tax year. This would put the total value of ISA savings and investments at over £1 trillion, Lloyds said.
Cash ISAs have seen their popularity grow in recent years, driven by interest rates and speculation of a cut to the cash ISA allowance. The amount saved in ISAs increased over 50% between the tax years 2021/22 and 2023/24 from £66.9 billion to £103 billion.
This increase was all in cash savings, with annual deposits in cash ISAs rising from £30.9 billion in 2021/22 to £69.5 billion in 2023/24. In contrast, stocks and shares ISA investment fell from £34 billion to £31 billion over the same period.
Simon Caddick, savings director at Lloyds, said: “Savers have rushed to make the most of the £20,000 allowance, with annual deposits more than doubling between the 2021/22 and 2023/24 tax years. We expect some of that trend to continue and that we will see a record year, pushing the total value of all ISA savings beyond £1 trillion.
“Savers are always looking for simplicity and ways to maximise their savings. ISAs are clearly at the front of many people’s minds when thinking about saving, but many aren’t using their allowance. Their tax-free status is a compelling reason ISAs should be part of every saver’s plan for their financial future.”
Main image: sean-sinclair-C_NJKfnTR5A-unsplash
