March 4, 2013
- Savers investing full ISA allowance since launch would have earned £18,592 in interest
- Only a quarter (28 per cent) plan to use maximum allowance for the current tax year
Savers making the most of their full cash ISA allowance every year since they were introduced in
would be £4,383* better off than if the same amount was put in an easy access savings account, according to analysis by
Research from MoneySupermarket** found four in ten people (39 per cent) plan to save or have saved into their cash ISA this tax year, but only 28 per cent of cash ISA savers plan to use their full ISA allowance, which for the current tax year is £5,640. Yet analysis shows since ISAs were launched, basic tax rate payers maximising the entire tax-free benefits offered by a cash ISA could have earned
in interest over this time. However, someone opting for a basic easy access savings account instead would only have earned £14,209 in interest, missing out on an extra £4,383* for their savings pot. Higher rate taxpayers would have missed out on an additional £8,386 by not taking advantage of a tax-free wrapper for their savings*.
Kevin Mountford, head of banking at
: "Even if you have never saved into an ISA before, it is never too late and with only a month until the tax year ends on 5
April, it's a case of use it or lose it when it comes to your ISA allowance. ISAs should be a number one consideration for UK taxpayers who want to make the most of the tax-free benefits on offer. Over the past couple of weeks, we have seen a number of providers launching new cash ISA products, paying rates over four times that of base rate, and for UK taxpayers, the tax-free allowance makes these accounts even more attractive than an easy access account. If you have savings and pay tax and don't use your full allowance, you are throwing money at the tax man, not something any of us like to do.
"Where possible, savers should look to make the most of their cash ISA allowance, and ensure any existing savings held elsewhere are moved into an ISA. Over time, a cash ISA can give a decent return with no risk. The maximum cash ISA allowance is £5,640 for this tax year, and will increase to £5,760 from
2013. For someone with an ISA already, their existing savings could be offering low returns - check the rate, and switch to a better deal if necessary.
"Stocks and Shares ISAs are another option for savers who want to make the most of their money and protect it from the tax man. Although riskier than cash ISAs, returns tend to be greater over a long term period. The combined tax allowance for Stocks and Shares and cash ISAs this tax year is £11,280, rising to £11,520 for the next year. With this type of product it's important anyone considering investing their savings fully understands what is involved - if necessary seek independent advice."