AJ Bell: ISA use hits 13-year high as savers rush back to cash

ISA contributions hit a 13-year high in 2023/24, with savers adding £28bn to Cash ISAs and parents putting over £1bn into Junior ISAs. Laura Suter of AJ Bell says the figures show ‘a strong rebound in savings but persistent inequalities.

Laura Suter, director of personal finance at AJ Bell, comments on the latest annual savings statistics:

“ISAs are back in fashion – for the first time in 13 years the number of ISA accounts adults paid into has topped 15 million. The latest data shows that in 2023/24 the nation paid into 9.9 million Cash ISA accounts and more than 4 million Stocks and Shares ISA accounts, with almost one million Lifetime ISA accounts also being paid into.

“Cash is king, as the nation funnelled almost £70 billion into their Cash ISAs in the 2023/24 tax year to protect it from the taxman’s clutches. The amount paid into Cash ISAs grew by 67% compared to the previous year, with an extra £28 billion paid into the tax-free accounts. The rise in Cash ISAs has been huge, with more than double paid in compared to just two years earlier. Whether rising interest rates, frozen tax bands equating to higher tax bills or rumours of ISA limits being cut are what’s driving this trend, the nation has clearly rediscovered its love of ISAs.

“Investment ISAs also saw a chunky rise in inflows, as people found themselves with bigger tax bills and made moves to protect their investments. There was an almost 11% increase in the amount paid into Stocks and Shares ISAs in the year, compared to the previous tax year, with a total of just over £31 billion paid into the accounts. However, levels aren’t near their pandemic peak, still at around £3 billion less than the 2021/22 Covid investing boom.”

Investment Junior ISA subscriptions surpass £1 billion for first time

“More parents are opening ISA accounts for their kids, and they are also stashing more money in the accounts, with nearly 1.4 million Junior ISAs subscribed to in 2023/24, up from 1.25 million in 2022/23.

“And parents have also ditched some of their reckless conservatism and embraced investing for their children. For years cash has dominated the Junior ISA landscape, with parents plumping for the safety of cash for their children’s savings, rather than the higher risk and higher potential returns of investing. But this year the amount subscribed to the Stocks and Shares versions of Junior ISAs has surpassed £1 billion for the first time.

“What’s more, the proportion of money paid into cash versions of the accounts has dropped. In 2022/23, 42% of the money put into Junior ISAs in the year went into the cash version, but that has dropped to 36% in the latest data. It means that almost two-thirds of the money paid into Junior ISAs is going into investments now.

“The nation’s kids will presumably be thankful for this shift, as holding the money in cash for many years, particularly for younger children, leaves it vulnerable to inflation, which can erode both returns and the eventual spending power of the pot at age 18. Whereas a long-term timeframe lends itself to investing and allowing more risk to ride out market fluctuations.”

Unclaimed Child Trust Fund pot surges to £1.5 billion

“The government really needs to get a grip on the problem of lost Child Trust Funds (CTFs) – where a child has turned 18 but their CTF funds go unclaimed. There are 758,000 accounts that have not been claimed, with the total value growing by another £100 million since last year to £1.5 billion.

“Well over half of the money in these accounts – £899 million – matured over a year ago. On top of this, more than 27,000 unclaimed accounts had a balance of £10,000 or more, with 280,000 pots containing over £1,000.

“The problem arises as many parents and children aren’t aware they even have the account, or don’t know which provider the money is with or how to track it down.Some CTF providers are also charging huge sums for managing the accounts, eating into the money, as highlighted by the 2023 Public Accounts Committee report.”

Number of unclaimed accounts by value
Account value	Number of accounts
£1,000+	280,000
£5,000+	57,000
£10,000+	27,000

Source: HMRC, AJ Bell. Continuing CTFs have matured but not yet been claimed. Includes CTFs maturing earlier in 2024/25 as well as previous tax years not claimed as at 5 April 2025.

Lifetime ISAs see record inflows but exit charges also jump

“The Lifetime ISA continues to be a popular way for younger savers to get a foot on the property ladder or save for retirement, with the number of accounts paid into jumping by 28% in 2023/24 meaning that almost one billion accounts were subscribed to. A record £2.3 billion was paid in during 2023/24, as more people took advantage of the government bonus to boost their savings.

“However, the figures also highlight the ongoing flaws with the product. The punitive withdrawal penalty is hitting savers hard, with over £100 million lost to exit charges last year alone – a 35% increase on the previous year. On top of that, more than £400 million was pulled out in unauthorised withdrawals, showing how many people either don’t fully understand the rules or are forced to raid their savings in an emergency. The average withdrawal remains modest at around £3,000, underlining that many people are cashing in relatively small amounts and being disproportionately penalised.

“The big story though is property, with just under £1.4 billion withdrawn for house purchases, up a huge 62% on the previous year. This shows the Lifetime ISA is still overwhelmingly being used as a home-buying vehicle rather than a retirement savings tool, raising questions about whether the current restrictions and penalties are fit for purpose.”

The gender ISA gap

“The gender gap remained the same, and still slightly more women than men subscribed to an ISA in 2023/24, with 51.6% of all ISA holders being women. However, the trend of women being more likely to opt for a Cash ISA has persisted, with 922,000 more women having a Cash ISA than men. It means that women make up 56% of Cash ISA holders, while they represent just 42% of Stocks and Shares ISA holders.

“We know that over time investing has generated higher returns than cash, so it’s unsurprising that men have bigger ISAs overall – as they are benefitting more from investment growth and compounding over time. It means that the average man’s ISA is worth £35,652 versus £32,533 for women – giving a gender ISA gap upwards of £3,000.

“When you compare the gender ISA gap at different ages, it highlights just how much investment returns are boosting men’s average ISA values over time. While the difference between men and women’s ISA values is just £80 when they are under 25, it peaks at a whopping £6,040 when we reach the 55 to 64 age group. The fact that it drops for the oldest age groups likely reflects people drawing down on their ISA pots, moving to cash to de-risk and spouses inheriting their partner’s ISAs on death.

“One bright spot is that if we look at the biggest ISA accounts there is a 50:50 split between men and women – as 49.6% of ISA holders of accounts worth £50,000 or more are women.”