- Total number of ISA subscriptions rose for the first time since the pandemic, to 12.5 million in 2022/23 (Source: HMRC – Annual savings statistics 2024)
- In total there are 22.2 million Brits with an ISA, illustrating their huge popularity with savers and investors
- 2022/23 saw a jump in the total amount paid into ISAs, up to £72 billion according to the latest figures
- Stocks and Shares ISA subscriptions fell in 2022/23 by 18% to £28 billion, while Cash ISAs saw an increase of over a third to nearly £42 billion
- Almost £1.4 billion sits unclaimed in Child Trust Funds (CTFs)
- Cash ISAs were subscribed to by 947,000 more women than men, while 494,000 more men subscribed to Stocks and Shares ISAs in 2022/23
Laura Suter, director of personal finance at AJ Bell, comments on the latest annual savings statistics:
“Savers turned to Cash ISAs in their droves as the total number of ISA subscriptions surged to 12.5 million in 2022/23, according to the latest figures from HMRC. Meanwhile Stocks and Shares ISAs suffered their first annual fall in the amount of money subscribed since the pandemic, as the split between cash and investments has widened.
“This drop in the amounts paid into investment ISAs partly reflects reaching the tail end of the Covid investing boom and a return to more normal market conditions. But it will also have been influenced by a period of high interest rates on cash in recent years, as well as a reduction in the amount of money people felt comfortable piling into investments during the cost-of-living crisis.
“Notably, these figures paint a picture at odds with the government’s drive to boost investment in UK plc and illustrate the need for ISA simplification to boost the number of people utilising the tax-free investment growth that Stocks and Shares ISAs can provide over the long term.”
Total account numbers jump, with a surge in the amount paid into Cash ISAs
“The total number of ISAs paid into has risen for the first time since the start of the pandemic. Cash ISAs took the spoils thanks to successive interest rate rises – with a 35% jump in the amount people paid into them compared to the previous year.
“A total of 12.5 million adult ISAs were subscribed to in the 2022-23 tax year, with 58% of the money going into cash accounts. Whilst the pivot back to cash might not be a surprise, it’s likely these figures underestimate the total impact of interest rate rises that continued through to August 2023.
“A bumper year for Cash ISAs came at the expense of Stock and Shares ISA though – which saw flows drop by 18% to just over £28 billion.
Junior ISAs
“Over 1.25 million junior accounts were subscribed to, up from 1.21 million the year before. But reckless conservatism by parents remains, as many saving for their kids continue to default to cash – 42% of the money put into Junior ISAs in the year went into the cash version.
“Junior ISA funds are locked away until a child turns 18. A long-term time frame lends itself to investing and allowing more risk to ride out market fluctuations. Cash held for younger children over the very long term is at the mercy of inflation eating into returns and the purchasing power of the pot by the time they reach age 18.”
Child Trust Funds
“There were 671,000 matured Child Trust Funds (CTFs) that had not been transferred to adult ISAs or paid out as at 5 April 2024. Known as ‘continuing CTFs’, they represent nearly £1.4 billion going unclaimed for children who’ve reached age 18. This is a jump from £1 billion in the previous year.”
Lifetime ISAs
“Lifetime ISA savers lost more than £75 million in withdrawal charges last year, as people raided their Lifetime ISA pots and faced the government exit penalty for doing so. The total amount paid in withdrawal charges rose by almost 40% on the previous year and is 14 times higher than it was when the accounts launched in 2017. The average value of withdrawals has hovered around the £3,000 mark since then, apart from a spike during the pandemic when the withdrawal charge was cut. But we’re seeing more individuals making unauthorised withdrawals from their accounts, leading to the spike in charges. There was an increase of almost a third in the number of savers making an unauthorised withdrawal last year, representing about one in eight of all Lifetime ISA savers.
“However, Lifetime ISAs are an increasingly popular product, with the ability to get a 25% government bonus towards your first home or retirement being very attractive for many savers. There was a 43% jump in the amount people paid into Lifetime ISAs in 2022/23, with an extra £732 million going into the accounts. The total amount saved in the year hit a record high of £2.4 billion in 2022/23 – almost double the amount being paid into the accounts three years ago. The average amount paid in per account has also risen, so more people are paying in more money to the accounts.
“More people are using the accounts to buy property, with around 57,000 people using their Lifetime ISA to buy a home last year. On average people took almost £15,000 out of the accounts to buy a home, which has increased by around £1,000 on the previous year. It makes sense that as the accounts have been around longer people are saving more into them, and so making larger withdrawals when they come to buy a house.”
The gender ISA gap
“Women make up 52% of ISA subscribers, and nearly a million more women subscribed to Cash ISAs than men in 2022/23. However, the average ISA value for men stands at £34,849 compared to just £31,819 for women, with consistently lower average values across all age brackets. Notably half a million more men subscribed to Stocks and Shares ISAs.
“The gender ISA gap reflects broader trends in the UK; a third of women recognise they're not investing enough for their long-term goals compared to a quarter of men*. And even when they open an ISA, their money isn't benefitting from investment returns that are historically higher than Cash ISA interest rates.
“AJ Bell Money Matters research suggests that women are held back predominantly by not understanding investing and concerns their investments will fall in value. The gender pay gap continues to be a barrier, but it’s crucial that regulators and platforms do more to help improve women’s knowledge and confidence around investing.”
