UK ISAs Market Report 2024

The future looks promising for the UK ISAs market. The tax-free benefits are attracting customers affected by the freeze on income tax thresholds. It is important for financial service providers to improve communication and transparency in order to enhance consumers’ understanding of the new ISA rules.

UK ISA Market Analysis

The freeze on income tax thresholds, alongside real-terms income growth, has led to more people paying the higher tax rate due to ‘fiscal drag’. ISAs’ tax-free status strongly benefits savers who would otherwise forfeit 40-45% of their savings income that exceeds the personal savings allowance, which currently stands at just £500 for higher-rate taxpayers. As income tax thresholds remain unchanged, we can expect to see a rise in the use of ISAs.

ISA product complexity can hinder product engagement and good consumer outcomes. As the government and FCA increase efforts to boost advice and guidance, ISA providers will need to ensure their products are accessible, easy to understand and align with saving and investing motivations.

Relying on savings guidance from non-experts, such as family and friends, can expose consumers to negative outcomes. Brands have an opportunity to launch referral programs where current users, and the people they refer, can receive a bonus payment into an ISA account or a limited-time boost to interest rates if they encourage somebody else to receive advice via a provider. A major barrier to receiving advice is the costs involved. This would nudge people towards sources of guidance, while improving potential savings returns.

UK ISAs Market Statistics

• UK ISAs market size: The value of ISA subscriptions in the UK increased by almost 8% in 2022/23.
• UK ISA ownership: Over a third of UK consumers own a cash ISA as of June 2024.
• UK ISA consumer attitudes: Over half of UK consumers expect to save more money in ISAs than any other savings/investments accounts.

UK ISAs Market Report – What’s Inside?

Key Topics Analysed in the Report

Report Scope

The focus of this Report is on the adult ISA market. Launched by the UK government in April 1999, an ISA is a tax wrapper for holding a range of investments that are exempt from income and capital gains tax. The ISA allowance – the maximum that can be deposited or invested in an ISA per tax year – is currently £20,000 (although the maximum that can be put into a lifetime ISA is £4,000 per year). This can all be put into one ISA or split between a number of ISA accounts.

The market comprises four product types:

• Cash ISAs are available to UK residents aged 18+.
• Stocks and shares ISAs are available to UK residents aged 18+.
• Lifetime ISAs were introduced in April 2017 to help young adults save for a home/retirement. Only those aged 18-39 can open a LISA.
• Innovative finance ISAs (IFISA), introduced in 2016, offer individuals aged 18+ a tax-free wrapper for any income earned from peer-to-peer investments.

Many individuals still retain a Help to Buy ISA, even though this type of ISA product was withdrawn at the end of November 2019.

Meet the Expert Behind the Analysis

This report was written by Lewis Cone, Mintel’s Associate Director – Financial Services. Lewis joined Mintel in May 2013 having graduated from the University of Southampton with a 2.1 BSc (Hons) degree in Economics and writes a range of industrial reports, from occupational health to the house building market.

New ISA rules have the potential to increase participation, but providers must ensure guidance is available to help savers make informed decisions aligned with their financial goals.

Lewis Cone
Associate Director – Financial Services