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Younger Savers Failing to Maximise Tax Free Allowance

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HALIFAX, UNITED KINGDOM -- (Marketwire) -- 03/28/13 -- The average cash ISA balance across England and Wales is GBP 8,844, according to Halifax; equivalent to a third (33%) of national average pre-tax annual earnings(1) of GBP 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 GBP 2,712, which is less than half of the current annual Cash ISA allowance of GBP 5,640. The average balance increases to GBP 4,389 for those aged between 35 and 44 and again to GBP 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 GBP 11,809, which is a third above the national average; rising to GBP 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 GBP 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 (GBP 9,512) and the lowest is in the North East (GBP 8,220); a difference of 16%. (See Table 2).

Whilst the average ISA balance of GBP 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 GBP 11,532 is 124% higher than in Hackney - which has the lowest (GBP 5,137).

South Buckinghamshire is followed by Derbyshire Dales (GBP 11,461), Chiltern (GBP 11,454) and Christchurch (GBP 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 (GBP 11,078), Staffordshire Moorlands in the West Midlands (GBP 10,898) and Hambleton in North Yorkshire (GBP 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 (GBP 6,043), Southwark (GBP 5,643) and Lewisham (GBP 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 GBP 8,973, just 2% higher than those held by women (GBP 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% (GBP 8,455 v GBP 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 GBP GBP GBP GBP GBP GBP and Wales 2,712 4,389 7,330 11,809 13,900 15,035 GBP 8,844============================================================================Source: Halifax; (i) all outstanding balances at end of January 2013

Table 2: Average ISA Balance by Region, January 2013

============================================================================ All Customers Female Average Male Average Average Balance Balance (GBP) Balance (GBP)Region (GBP) (i) (i) (i)============================================================================North East GBP 8,220 GBP 8,057 GBP 8,455============================================================================North West GBP 8,770 GBP 8,680 GBP 8,932============================================================================Yorkshire & Humberside GBP 8,737 GBP 8,646 GBP 8,886============================================================================West Midlands GBP 8,858 GBP 8,706 GBP 9,098============================================================================East Midlands GBP 9,291 GBP 9,223 GBP 9,464============================================================================East Anglia GBP 9,512 GBP 9,475 GBP 9,670============================================================================London GBP 8,643 GBP 8,889 GBP 8,622============================================================================South East GBP 9,313 GBP 9,336 GBP 9,389============================================================================South West GBP 8,653 GBP 8,615 GBP 8,767============================================================================Wales GBP 8,819 GBP 8,728 GBP 8,989============================================================================England and Wales GBP 8,844 GBP 8,816 GBP 8,973============================================================================Source: Halifax; (i) all outstanding balances at end of January 2013

Table 3: 20 Local Authority Districts with the Largest ISA Balances

============================================================================Local Authority District All Customers Average Region Balance (GBP) (i)============================================================================South Buckinghamshire South East GBP 11,532============================================================================Derbyshire Dales East Midlands GBP 11,461============================================================================Chiltern South East GBP 11,454============================================================================Christchurch South West GBP 11,317============================================================================Harrow London GBP 11,283============================================================================Brentwood East Anglia GBP 11,244============================================================================East Dorset South West GBP 11,080============================================================================Fylde North West GBP 11,078============================================================================Mole Valley South East GBP 11,001============================================================================Vale of White Horse South East GBP 10,947============================================================================St Albans East Anglia GBP 10,942============================================================================Epsom and Ewell South East GBP 10,911============================================================================Staffordshire Moorlands West Midlands GBP 10,898============================================================================Hambleton Yorkshire and the Humber GBP 10,891============================================================================Windsor and Maidenhead South East GBP 10,862============================================================================Wokingham South East GBP 10,815============================================================================Rochford East Anglia GBP 10,804============================================================================Harborough East Midlands GBP 10,699============================================================================Epping Forest East Anglia GBP 10,687============================================================================Elmbridge South East GBP 10,652============================================================================England and Wales GBP 8,844============================================================================Source: Halifax; (i) all outstanding balances at the end of January 2013

Table 4: Local Authority Districts with the Lowest Average ISA Balances, January 2013

============================================================================Local Authority All Customers Average Balance District Region (GBP) (i)============================================================================Hackney London GBP 5,137============================================================================Newham London GBP 5,438============================================================================Southwark London GBP 5,643============================================================================Lewisham London GBP 5,909============================================================================Barking and Dagenham London GBP 6,043============================================================================Manchester North West GBP 6,152============================================================================Lambeth London GBP 6,196============================================================================Tower Hamlets London GBP 6,556============================================================================Corby East Midlands GBP 6,577============================================================================Kingston upon Hull Yorkshire and the Humber GBP 6,624============================================================================England and Wales GBP 8,844============================================================================Source: Halifax; (i) month end all outstanding balances for January 2013

Editors' Notes:


(1) average annual gross earnings for all employees (ONS) for England andWales 2012.(2) HMRC Individual Savings Accounts (ISA) Statistics September 2012. Thesestatistics include both ISA cash and ISA stocks and shares - however 80% ofISA accounts subscribed by adults in 2011/12 were for cash ISAs. The Halifaxfigures in this release are for Cash ISAs only.(3) All average balance data in this release are per customer.


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

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