Women and the young increase Isa take-up

February 18th, 2010

An interesting report released this week shows that ever greater numbers of young people and women are taking up the option of tax free savings in Individual Savings Accounts or Isas.

Isas were introduced 10 years ago by the government in an attempt to encourage people to get into the savings habit. As such they were an abject failure as demonstrated by the UK’s debt mountain, but they are still a useful tool for those wishing to save.

The new report, from the Halifax, shows that 37% of households in the UK have an Isa, which represents 14.2 million, a rise of 53% over nine years.

Each person is only allowed to open one cash and one stocks and shares Isa each year. Cash is the most popular component, according to the Halifax research.

The amount people can save in an Isa has recently risen from £7,200 to £10,200, of which half can be saved in cash and half, or all, in stocks and shares.

The new limit applied from October 2009 for anyone born on or before 5 April, 1960. For everyone else the limit will rise from 6 April, 2010.

The changes were have been made because, in low-interest times, the government wanted more reward for those who have saved.

The figures show that slightly more men than women signed up to a tax-free account in the first seven years of the scheme. However, the number of women registering increased, the number rising by 52% over the same period compared with a 35% rise among men.

Those under 25 have seen the fastest rise in those registering, an increase of 88% in the first nine years.

Analysts believe that the lifestyles of young people could explain the trends in take-up of Isas among the younger generation, most of whom want to travel. Specifically, the report shows that many young people are using Isas to save for a mortgage deposit.

However, this age group, who are often paying off large student debts, still has the lowest number of individuals subscribing to an Isa.

On the other hand, the 25 to 34 age bracket has the smallest rise in take-up, probably because these are first time buyers and therefore with little money to save after making mortgage payments.

A national and regional analysis shows that the proportion of households with an Isa was highest in the south east of England, but the number has been growing the fastest in Scotland.

The effect of the recession is thought to be the reason for the fall in the average amount paid into each account. This dropped to £2,636 in 2008-09, down from £3,064 in 1999-00.

This entry was posted on Thursday, February 18th, 2010 at 6:49 am and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Women and the young increase Isa take-up

Leave a Reply