Britons are missing out on billions of pounds of tax free savings by failing to utilise their annual cash ISA allowance, new research suggests.
A survey carried out by uSwitch.com found that just half of UK adults plan to put money into a tax-efficient cash ISA this year and those who do will be saving an average of £2,784 – just over half of what the current ISA limit allows (£5,340).
Only a quarter (25 per cent) intend to take full advantage of the ISA allowance this year, despite 42 per cent of consumers polled saying it’s important to make the most of their allowance, while nearly a third plan to deposit less than £1,000 by April.
The findings also indicate that only a fifth (22 per cent) of Brits actually know what the cash ISA allowance is for this year, with over a third (37 per cent) underestimating how much they can put away, while one in two savers are also unaware of how much interest they are earning through their ISA account . Furthermore, 47 per cent have never switched their ISA to get a better rate.
Commenting on the research, Michael Ossei, personal finance expert at uSwitch.com, said: “Given the current level of uncertainty, having savings to fall back on is more important than ever. And with rates fairly low, it pays to make the most of your savings by ensuring that they are tax-free.
“For a new generation of ‘need cash now’ savers, locking money away for any length of time is a big ask. However, some ISAs are instant-access, meaning you can still get your hands on your cash while benefiting from tax-free savings too.”
“The most important thing to do before taking out any sort of savings product is to shop around for the best deal and to take out an ISA or savings plan that suits your needs,” he added.
“Arming yourself with the right information is the first step in winning a decent return for your hard-earned cash.”
