Scots miss out by failing to use up their Isa allowances

Only in Northern Ireland are savings balances lower than in Scotland, according to research by Halifax. The average Isa savings balance in Scotland is now £7,078, compared with a UK average of £8,505.

In contrast, savers in the south-east of England, East Anglia and the East Midlands are putting more than £9,000 in their tax-free cash Isa accounts.

Scottish savers are putting an average of just 28 per cent of their annual pre-tax earnings into their Isas, below the UK average of 31 per cent and compared with more than a third in several parts of the UK, including Wales, Northern Ireland and the north of England.

The second lowest savings balances in the UK are in Glasgow, though the average amount put away of £5,750 a year represents 32 per cent of annual gross income. Savers in West Lothian have the fourth lowest balances, at £5,889.

The research is published a week after the Treasury confirmed that the annual Isa limit will rise from £10,680 to £11,280 next April. The cash limit will go up to £5,640. The increase is in line with the September level in the consumer prices index (CPI) measure of inflation, which reached a high of 5.2 per cent.

It is the biggest change to the annual limit since Isas were introduced in 1999, with the rate raised only once before the allowance was linked to inflation in March last year. With inflation expected to fall next year, the April 2012 rise could be the biggest for some time.

The limits will not apply to junior Isas, which arrive on 1 November. The annual amount that can be paid into a Jisa – designed to replace child trust funds – has been set at £3,600 a year. It will remain at that level until April 2013, after which they be uprated in line with CPI.

However, the Treasury has raised the annual limit on existing CTFs from £1,200 to £3,600, taking effect when Jisas launch.