Younger Savers Failing to Maximise Tax Free Allowance
HALIFAX, England, March 28, 2013 /PRNewswire/ --
Just 15% of 2012/13 ISA customers have used full 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[1] 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 (See Table 1).
Indeed, industry[2] 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%. (See Table 2)
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. (See Table 3)
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. (See Table 4)
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). (See Table 2)
Table 1: Average Balance by Age (over 25's) - January 2013
25-34 35-44 45-54 55-64 65-74 75+ All age
groups
England
and
Wales GBP2,712 GBP4,389 GBP7,330 GBP11,809 GBP13,900 GBP15,035 GBP8,844
Source: Halifax; [*] all outstanding balances at end of January 2013
Table 2: Average ISA Balance by Region, January 2013
Female
Average
Region All Customers Balance Male Average
Average Balance (GBP) * (GBP) * Balance (GBP) *
North East GBP8,220 GBP8,057 GBP8,455
North West GBP8,770 GBP8,680 GBP8,932
Yorkshire & Humberside GBP8,737 GBP8,646 GBP8,886
West Midlands GBP8,858 GBP8,706 GBP9,098
East Midlands GBP9,291 GBP9,223 GBP9,464
East Anglia GBP9,512 GBP9,475 GBP9,670
London GBP8,643 GBP8,889 GBP8,622
South East GBP9,313 GBP9,336 GBP9,389
South West GBP8,653 GBP8,615 GBP8,767
Wales GBP8,819 GBP8,728 GBP8,989
England and Wales GBP8,844 GBP8,816 GBP8,973
Source: Halifax; [*] all outstanding balances at end of January 2013
Table 3: 20 Local Authority Districts with the Largest ISA Balances
Local Authority
District Region All Customers Average Balance (GBP) *
South Buckinghamshire South East GBP11,532
Derbyshire Dales East Midlands GBP11,461
Chiltern South East GBP11,454
Christchurch South West GBP11,317
Harrow London GBP11,283
Brentwood East Anglia GBP11,244
East Dorset South West GBP11,080
Fylde North West GBP11,078
Mole Valley South East GBP11,001
Vale of White Horse South East GBP10,947
St Albans East Anglia GBP10,942
Epsom and Ewell South East GBP10,911
Staffordshire Moorlands West Midlands GBP10,898
Hambleton Yorkshire and the Humber GBP10,891
Windsor and Maidenhead South East GBP10,862
Wokingham South East GBP10,815
Rochford East Anglia GBP10,804
Harborough East Midlands GBP10,699
Epping Forest East Anglia GBP10,687
Elmbridge South East GBP10,652
England and Wales GBP8,844
Source: Halifax; [*] all outstanding balances at the end of January 2013
Table 4: Local Authority Districts with the Lowest Average ISA Balances, January 2013
Local Authority
District Region All Customers Average Balance (GBP) *
Hackney London GBP5,137
Newham London GBP5,438
Southwark London GBP5,643
Lewisham London GBP5,909
Barking and Dagenham London GBP6,043
Manchester North West GBP6,152
Lambeth London GBP6,196
Tower Hamlets London GBP6,556
Corby East Midlands GBP6,577
Kingston upon Hull Yorkshire and the Humber GBP6,624
England and Wales GBP8,844
Source: Halifax; [*] month end all outstanding balances for January 2013
Editors' Notes:
Note:[1] average annual gross earnings for all employees (ONS) for England and Wales 2012.
[2] HMRC Individual Savings Accounts (ISA) Statistics September 2012. These statistics include both ISA cash and ISA stocks and shares - however 80% of ISA accounts subscribed by adults in 2011/12 were for cash ISAs. The Halifax figures in this release are for Cash ISAs only.
[3] All average balance data in this release are per customer.
Methodology
Data in this release is from the Halifax savings database for all outstanding stock of savings balances held by customers for all product types at the end of January 2013.
National averages in this release are for England and Wales only and are in not comparable to those stated in previous releases which included data for Scotland and Northern Ireland.
No adjustment is made to the calculation for area average balance where the gender is not known. Therefore, the overall savings balance may differ from the averages implied by the male and female averages.
The figures in this report, by their very nature, exclude people who have no savings. Figures from the ONS's Financial Resources Survey 2010/11 show that 40% of households have no savings (Table 4.9 - Households by amount of savings and investments).
"This report is prepared from information that we believe is collated with care, however, it is only intended to highlight issues and it is not intended to be comprehensive. We reserve the right to vary our methodology and to edit or discontinue/withdraw this, or any other report. Any use of this report for an individual's own or third party commercial purposes is done entirely at the risk of the person making such use and solely the responsibility of the person or persons making such reliance. "© Bank of Scotland plc all rights reserved
Customer Relations
Halifax P O Box 548 Leeds LS1 1WU
T. 08457394959
E. customerrelations@halifax.co.uk
Website: www.halifax.co.uk
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