All things (not) being equal: How women can close the ISA gap

Did you know that women open more ISAs than men? But are they taking full advantage of them? Our latest article looks at why making better use of ISAs could help women move towards gender wealth equality.

While most people have seen their finances impacted in some way by COVID-19, women have been disproportionately affected. To rub salt in the wound, as people across the UK begin to refocus their financial priorities and look at saving for the future, women are still at a disadvantage.

One red flag in particular is Individual Savings Accounts. ISAs are a tax-friendly way to save for the future, and women are particularly big fans – official figures show that they opened more than half of all ISAs in the 2017/18 tax year (the most recent year for which data is available)1. But despite women holding more ISAs in total, a gender ISA gap has opened up, which sees the value of women’s ISAs worth less than that of men.

Mind the gap

This won’t be welcome news for women, who already have a gender pay gap and pensions gap to contend with.

The former might actually be causing the ISA gap – as women may have less money to play with overall. Many still take on the lion’s share of caring responsibilities, meaning they often accept lower-paid jobs that offer flexible hours, and many single-parent households are headed by women, and money may be tight, so women may struggle to save as much into ISAs as a man could.

A fear of risk?

Some women are more risk-aware, which can mean they are more likely to choose a Cash ISA over a Stocks and Shares ISA, as they may prioritise familiarity over growth. But with this comes an opportunity cost, as their cash savings won’t necessarily have the same potential for higher returns as if they were invested, and they also risk being eaten away by the rising cost of living.

Another issue contributing to the gender ISA gap is women’s lack of trust in providers and insufficient knowledge. Fidelity’s report ‘The Financial Power of Women’ found that a lack of knowledge was a barrier to investing for 79% of women, while 81% highlighted a lack of trust in investment providers.2

The glimmer of good news, however, is that recent research by the International Longevity Centre and St. James’s Place shows that, by finding the right financial adviser, women can feel more confident and in control of their financial future, and enjoy a greater sense of overall well-being.

Upping your ISA game

It’s clear that women are focused on building a nest egg for the future, with nearly one million more than men opening savings accounts in the last few years, and 65% spending less since the pandemic started.3

But the gender ISA gap is proof that women aren’t making the most of their ISA allowance to save and invest without having to worry about paying Capital Gains Tax, Income Tax or Dividend Tax on the returns you make.

If you don’t already have an ISA, it’s simple to set one up – you can fund it with a lump sum or set up a regular automated payment, with small minimum amounts. In the current tax year the allowance is £20,000, but don’t be put off by that figure – you only have to put in as much as you can afford to (subject to minimum contribution levels).

There are different types of Cash and Stocks & Shares ISAs, and you can open one of each type every tax year, and spread your £20,000 allowance across them as you wish.

For example, you could put:

  • £5,000 into a Cash ISA
  • £4,000 in a Lifetime ISA* (this is the maximum you can put in)
  • £11,000 in a Stocks and Shares ISA.

You can also put £9,000 a year into a Junior ISA on behalf of a child – this is separate from your £20,000 ISA allowance.

If you’ve already got an ISA, check to see how much of your ISA allowance you have left this tax year, and whether you can put away more to maximise your savings. Set up a direct debit or increase an existing one if you can. If you’re currently saving into a Cash ISA, consider opening a Stocks & Shares ISA for the potential of higher returns.

Contact us today

If you’d like to find out how to get more from ISAs, escape the gender ISA gap and build a more secure financial future, contact us today!

And don’t forget the end of the tax year is fast-approaching – download our tax year-end checklist for the simple steps you can take right now!


1 HMRC, Individual Savings Account (ISA) Statistics, June 2020
2 Fidelity International, The Financial Power of Women, 2018, 1,222 people surveyed
3 WealthiHer, ‘The Changing Faces of Women’s Wealth’ report, January 2021

*Lifetime ISAs are not available through St. James’s Place.

The value of an ISA with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than you invested. An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a Cash ISA.

The favourable tax treatment of ISAs may not be maintained in the future and is subject to changes in legislation.

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