Younger savers failing to maximise tax free allowance
The average cash ISA balance across England and Wales is £8,844, according to Halifax; equivalent to a third (33%) of national average pre-tax annual earnings of £27,039.
There are significant differences in average ISA balances depending on age, location and gender. Savers aged 25 to 34 have an average balance of £2,712, which is less than half of the current annual Cash ISA allowance of £5,640. The average balance increases to £4,389 for those aged between 35 and 44 and again to £7,330 for customers between 45 and 54 years of age; all well below the national average.
Unsurprisingly, older savers have higher balances. Those in the 55 to 64 age band have an average balance of £11,809, which is a third above the national average; rising to £15,035 for savers over the age of 75.
Indeed, industry figures show that the proportion of savers with ISAs valued at £15,000 or more is highest among the 65 plus age group.
Richard Fearon, Head of Halifax Savings, comments: "Our research shows that age is a significant factor in determining the size of an ISA holding. Older savers, not surprisingly, have the highest ISA balances as they have had longer to accumulate savings whereas savers between 25 and 54 have an ISA balance considerably lower than the national average.
"Savers aged between 25 and 54 make up over 70% of all taxpayers and, therefore have the greatest chance to benefit from using their full ISA allowance. Just 15% of savers that have funded their ISA with us this year have reached the maximum limit, so the potential for further tax free saving over the next month is huge."
ISA balances vary sharply between areas
Regionally, the highest average balance is held by savers in East Anglia (£9,512) and the lowest is in the North East (£8,220); a difference of 16%.
Whilst the average ISA balance of £8,844 is equivalent to a third of gross annual earnings, this proportion is highest in Wales (39%) and lowest in London (24%).
At a local area district (LAD) level, the differences are much greater. ISA customers in South Buckinghamshire have the highest average balance, which at £11,532 is 124% higher than in Hackney - which has the lowest (£5,137).
South Buckinghamshire is followed by Derbyshire Dales (£11,461), Chiltern (£11,454) and Christchurch (£11,317). These are all areas characterised by an aging population.
Sixteen of the 20 LADs with the highest average balances are in southern England; the four from the north are Fylde in Lancashire (£11,078), Staffordshire Moorlands in the West Midlands (£10,898) and Hambleton in North Yorkshire (£10,891), as well as Derbyshire Dales.
At the other end of the range, seven of the ten lowest ISA savings areas are in London. Besides Hackney, the other areas with the lowest balances are Newham (£6,043), Southwark (£5,643) and Lewisham (£5,909). These are all areas with a younger than average population.
Women save a greater percentage of earnings tax free
As a proportion of average earnings, female savers have an average ISA balance that is equivalent to 43% of their gross annual average earnings - 17 percentage points more than male ISA savers (26%).
In Yorkshire and the Humber, South West, East Midlands and Wales the average ISA balance for women is equivalent to almost half of female average gross annual earnings.
Savings by men are highest in proportion to earnings in Wales (33%). The lowest levels of savings relative to earnings are in London for both men (19%) and women (31%).
Men have an average ISA balance of £8,973, just 2% higher than those held by women (£8,816). Men have higher balances across all regions of England and Wales with the exception of London. The gender differences, however, are small with the largest in the North East, at 4% (£8,455 v £8,057).