Business

Isa savings at new record high, says HMRC

Piggy bank Image copyright PA

Savers put an average of £6,338 into Individual Savings Accounts (Isas) in the last financial year, a rise of 5% on the previous year and a record high.

Overall £80bn was subscribed to these tax-free cash or investment accounts in the 12 months to April, also a record.

This was up slightly on the previous 12 months, and the second year in which the Isa limit has stood at £15,000.

Previously, savers could only put less than £12,000 in the accounts each year, half of which could be in cash.

The figures are published each year by HM Revenue and Customs (HMRC), which oversees the system. A wide range of suppliers of these accounts includes the major High Street banks.

The vast majority of Isa savings is in cash despite continued low interest rates. In June, consumer group Which? said that most loyal customers received "woeful" interest rates on their Isas, with returns of as little as 0.05% when initial bonus rates expired.

There was a slight drop in the number of adults taking out Isas, falling from 13 million in 2014-15 to 12.7 million in 2015-16.

Regional differences

More detailed analysis, which only covers the period to April 2014, showed that people living in the South West of England were most likely to put money into an Isa.

Half of the population of the region had cash or investments in the tax-free accounts in the 2013-14 financial year.

The lowest proportion of Isa savers among the population was in Northern Ireland, where 20% of people used the accounts.

In the English regions, London (36%) had the lowest proportion of Isa subscribers.

The age profile of the population - much younger in London than the South West - is key to this trend, with those aged over 65 the most likely to have Isa savings.

Separately, some 740,000 Junior Isa accounts were subscribed to in 2015-16 - the fourth full financial year since the scheme was launched, up from 510,000 in 2014-15. Funds in these accounts cannot be unlocked until the saver reaches the age of 18.

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