Britain’s ISA market is on the cusp of reaching £1trillion, with close to £900billion currently sitting in tax-efficient savings and investment accounts held by more than 21 million adults.
The figures reveal that approximately four in ten Britons now use ISAs to shelter their money from the taxman.
“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 AJ Bell Senior Pensions and Savings Expert Charlene Young.
The combined worth of Cash and Stocks and Shares ISAs has surged by more than 80 per cent over the past decade, climbing from £470billion in 2013/14 to £871 billion in 2023/24.
Older savers have accumulated the largest ISA pots, with those aged 65 and above holding an average of more than £64,000 per account.
By contrast, under-25s typically have around £8,300 tucked away in their ISAs.
Nearly half of pensioners aged 65 and over possess an ISA, compared with roughly one quarter of young adults below 25.
During 2022/23, approximately 2.5 million savers maximised their £20,000 annual ISA allowance, though most contribute far smaller sums.
More than 40 per cent of those making deposits added less than £2,500 to their accounts, while over half paid in under £5,000.
The typical contribution to a Stocks and Shares ISA stood at £7,594, slightly higher than the £6,993 average for Cash ISAs.
ISA alert: Over-65s sitting on £64,000 in tax-free savings as market nears £1TRILLION
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GETTYA notable gender divide exists in how men and women approach their ISA investments.
While women outnumber men as ISA holders, with nearly 11 million female account owners compared to 10.3 million males, their investment choices differ markedly.
Fewer than a third of women direct their ISA contributions into Stocks and Shares accounts, at just 29 per cent.
Men prove considerably more willing to embrace investment risk, with 41 per cent channelling their ISA money into equities.
Fewer than a third of women direct their ISA contributions into Stocks and Shares accounts, at just 29 per cent
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GETTYWomen show a stronger preference for the security of Cash ISAs over market-linked alternatives.
This investing gap between the sexes is particularly stark among younger savers, with the disparity reaching its peak in the 25 to 34 age bracket.
Millions of Britons are leaving substantial sums languishing in cash rather than putting their money to work in the markets.
Some 3 million individuals with Cash ISA balances exceeding £20,000 have no Stocks and Shares ISA whatsoever, representing at least £101 billion sitting idle.
A total of 4.5 million adults have accumulated more than £10,000 in Cash ISAs without holding any investment equivalenT
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PAMore than a million of these savers hold upwards of £50,000 in cash accounts yet still choose not to invest.
A total of 4.5 million adults have accumulated more than £10,000 in Cash ISAs without holding any investment equivalent.
These substantial cash holders already possess a financial buffer and could be prime candidates for long-term investing.
The government should concentrate on encouraging this group to consider investments if it wishes to foster a healthier culture of wealth-building across the nation.