With the ISA deadline fast approaching on 5th April, millions of Brits are attempting to use up their tax-free allowances before they reset. However, with only 26% of Brits holding a Cash ISA, it raises the question – are we really making the most of tax-efficient savings?
Research from Shepherds Friendly reveals key insights into Britain’s saving habits:
- Brits save an average of £421 each month (including investments and non-investment savings).
- Men save an average of £446 per month, whereas women save £330, meaning men save 35% more on average.
- Shockingly, 43% of Brits save NOTHING at all each month.
The research also reveals insight into Brits’ ISA saving behaviours:
- Brits put an average of £295 into their Cash ISA each month, however, one in four contribute NOTHING at all to their Cash ISAs.
- 18-24-year-olds are the best cash ISA savers, setting aside £425 each month.
- Stocks and Shares ISA holders save an average of £364 per month, with 35-44-year-olds leading at £608.
- On average, men save £116 per month more than women, highlighting a gender savings gap.
- Lifetime ISA savers set aside £416 monthly, which is more than the £333 a month you’d need to save to hit the £4,000 limit. However, a stark gender gap remains—men save £520 vs. £250 for women.
- The 25-44 age group are the most active Lifetime ISA users, saving £505 per month, likely to get on the property ladder.
Below, Derence Lee, Chief FInance Officer at Shepherds Friendly the importance of ISAs for helping you grow your long-term savings:
“Using an ISA is a great way to build long-term savings, allowing you to save up to £20,000 tax-free each year. Unlike keeping money in a current account – where low interest rates mean your savings could lose value in real terms – ISAs offer a smarter, more effective way to grow your money and protect it from inflation.
“With the recent changes by the Bank of England to the base-rate, some savings accounts have lowered their interest rates in response. You can still find good ISA deals, but the change is a real example of why future-proofing your finances is essential. ISAs can help you do this by allowing you to maximise tax-free growth and, in some cases, shield your savings from the impact of sharp fluctuations in the economy.
“Choosing which ISA is best for you will depend on your savings goals. Whilst a cash ISA is more accessible, Stocks and Shares ISAs can offer higher potential for investment growth over the medium to long-term, while Lifetime ISAs are popular among those looking to buy a home due to the government bonus you receive when withdrawing your savings.”
