- Around £726bn is held in ISA accounts across the UK, with the majority in stocks and shares
- Almost £100bn is held in cash ISAs by individuals with £20,000 or more who do not invest
- The average stocks and shares ISA account is worth over £65,000 while a typical cash ISA account holds under £13,500
- Across the UK, 22.3 million adults hold an ISA, with around 3.6 million holding both stocks and shares and cash accounts, 4.2 million using ISAs solely to invest and 14.4 million with a cash ISA only
- Around 1.8 million use up their full ISA allowance, although most pay in far smaller amounts with nearly 60% contributing less than £5,000 a year
- Gender investing gap sees less than a third (31%) of women investing money they pay into an investment ISA, rising to 44% among men
“ISAs are an astonishingly popular savings and investment product, with millions of people across the UK taking advantage of the tax perks of an ISA to set aside money for the future,” says Tom Selby, director of public policy at AJ Bell.
“There is now well in excess of £700 billion held by Brits in ISAs, with most of this invested for the long-term in stocks and shares ISAs. Despite complexity creeping into the ISA system in recent years, savers and investors clearly remain attracted to the choice, tax efficiency and flexibility they can get from the product.
“Chancellor Rachel Reeves has an opportunity to build on the success of ISAs to-date by simplifying the system, with the potential added benefit that this will make it easier for people to transition from holding cash to investing. Merging cash ISAs and stocks and shares ISAs into a single main ISA product would remove friction from this decision-making process and could help unlock some of the £100 billion held by people in cash ISAs with a significant balance who are not currently investing a penny in stocks and shares ISAs. This relatively straightforward reform, combined with the introduction of better help and guidance for non-advised investors through the introduction of ‘targeted support’ reforms, would go a long way to delivering the retail investing revolution Reeves wants to see, without creating unwelcome complexity by introducing a lower allowance for cash holdings.
“Boosting investing should naturally benefit UK companies, but if the government wants to be really bold, it should review the non-sensical application of 0.5% stamp duty on UK shares – a tax that explicitly discourages investing in companies on these shores. While scrapping stamp duty on shares altogether would likely cost several billion pounds, a pared back reduction in stamp duty focused on ISAs would deliver a pro-British incentive at a fraction of the cost.
“A package of reforms along these lines would benefit savers, investors and UK Plc at very little cost to the taxpayer.”
How much are ISAs worth?
The total value of ISAs held by UK adults is up 64% in a decade, from £443bn to £726bn between 2013 and 2023. Around £431bn is invested in stocks and shares ISAs, and £294bn in cash ISAs.
A further £9.9bn is held in Junior ISAs for children, with £5.4bn in investment accounts and £4.5bn held in cash.
Source: AJ Bell/HMRC
- What do people your age do with their ISA?
Of the UK’s 22.3 million ISA holders, more than 6 million are over 65, meaning roughly half (49%) of all adults in this age group hold an ISA.
However, there are plenty of young people using ISAs too. Some 29% of 18-24 year olds have an ISA account, rising to 38% among those in their late 20s and early 30s.
Source: AJ Bell. HMRC and ONS figures used to estimate % of ISA holders by age group
Although it illustrates that ISAs are a popular way for young people to start building up their savings and investments, a sizeable proportion are paying into a cash ISA rather than investing. Despite young people often having long time horizons over which they’ll accumulate wealth, investors are still in the minority.
Many younger people will also be using a Lifetime ISA (LISA) alongside or instead of a cash or stocks and shares ISA. Since launch in 2017, around £8 billion has been paid into Lifetime ISAs, with AJ Bell campaigning for reforms to improve uptake and future-proof the accounts to ensure they work for aspiring homeowners.
Source: AJ Bell. Analysis of HMRC and ONS data. Total percentage of UK adult population in each age group contributing to ISAs in 2021/22.
- Are ISA holders putting too much in cash?
A significant number of UK adults hold a large cash ISA balance but don’t invest. Over 4.4 million adults hold in excess of £10,000 in a cash ISA but don’t invest and 3 million have over £20,000 without having any stocks and shares ISA investments.
At a conservative estimate, those 3 million savers hold almost £100 billion in cash ISA accounts but no ISA investments*. Encouraging just a small proportion of them to invest could have a significant impact on markets, providing a huge injection of capital from retail investors who tend naturally to focus on investing in UK companies and funds.
AJ Bell has campaigned over a number of years for simplification of the ISA system in order to encourage more people to invest, boosting long-term personal prosperity and providing additional stimulus for capital markets.
- Who could be impacted by a cut to the Cash ISA allowance?
Reports suggest chancellor Rachel Reeves is considering cutting the cash ISA allowance, which currently stands at £20,000 per year. Some argue that curbing the tax break available to cash savers could encourage more people to invest, helping support UK capital markets.
AJ Bell has instead campaigned for a simplification of the ISA system, arguing that a simpler ISA landscape would instead make it easier for people to navigate their ISA choices and move from saving to investing. The chancellor should consider merging cash and stocks and shares ISAs as a first step toward simplification.
However, were the cash ISA annual subscription limit cut – with rumours suggesting it could fall to as little as £4,000 – it is still likely the majority of ISA savers would be unaffected.
HMRC figures show that over two-thirds (67%) of those paying only into a cash ISA contribute less than £5,000. Meanwhile just 10% use the maximum £20,000 allowance.
- How much do your peers have in their ISA?
The average ISA account is worth over £33,000, although this varies significantly by age.
Among ISA holders aged 65 and over, the average account is worth more than £63,000, while under 25s have around £7,700.
- How much are people paying in?
Around 1.8 million ISA holders used the full £20,000 annual ISA allowance, according to HMRC’s most recent figures, equating to roughly 8% of all ISA holders.
Unsurprisingly, most people pay in far smaller amounts – almost 60% of those subscribing to ISAs paid in less than £5,000.
- Gender investing gap
There are more female ISA holders than men, with 11.5 million women having an ISA account and 10.7 million men.
However, men are much more likely to be investing their ISA, whereas women favour cash ISAs more heavily.
While a similar proportion of male and female ISA holders made contributions to their accounts in the last year for which HMRC publish data, men were far more likely to be investing.
Almost half (44%) of men paying into an ISA opted to put their money into a stocks and shares account. In contrast, less than a third of females (31%) contributing to an ISA put their money into investments.
You can read more about why women tend toward cash ISAs in the latest AJ Bell Money Matters report.
- Junior ISA holders
Close to £10bn is held in Junior ISAs for children across the UK, with 1.25 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 £1,220.
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 (£1,797) compared to a cash Junior ISA (£848).
Background
Figures based on AJ Bell analysis of HMRC data published September 2024. Total values and subscriptions run up until 2022/23. Age and gender breakdown runs up until 2021/22.
Proportion of adult population holding an ISA estimated based on HMRC figures for total number of ISA holders, as well as ONS data on population size.
*Source: AJ Bell. HMRC estimates that among those ISA holders with cash ISAs only and no stocks and shares ISA there are 647,000 adults with £20,000-£24,999, 1,213,000 with £25,000-£49,999, and 1,111,000 with £50,000 or more. Assuming each holds only the minimum balance within the range (£20,000, £25,000 and £50,000 respectively) the total held by these individuals amounts to £98,802,779,503.82.
