24% of Britons will invest £11,280 in their 2012-13 ISA allowance Go compare with our comparison table

24% of Britons will invest £11,280 in their 2012-13 ISA allowance

08 March 2013 / by Isabel Buxton

The latest research released by NS&I suggests that there has been an increase in the number of people who’ll be making use of their annual ISA allowance.*

Despite the Bank of England base rate maintaining an historic low of 0.5% since March 2009, it seems that savers are coming to terms with lower rates of interest on saving products.  A general air of acceptance, as savers make the best of poor interest rates, seems to be the order of the day. Of 1,200 adults surveyed by NS&I 9% said that they found the current rates on ISAs off-putting, representing a decrease from 30% in 2010, when the shock of the low base rate was still relatively raw. 

Mixed reactions on the ISA scene

The research suggests that slightly more people will be using at least a proportion of their annual tax-free ISA allowance this year, with around 18% responding in the affirmative. This represents a rise of 2% from last year and 3% from the year before. However, the number of people who will take advantage of their full ISA allowance has fallen slightly. According the research, just under a quarter intend to use their full £11,280 allowance in this tax year, down from just over a quarter in 2011/12. This is perhaps due to a general tightening of belts as people have to make their money work harder – in fact, 32% of those surveyed said that they couldn’t afford to use any of the ISA allowance at all this year. 

Greater customer awareness

On a positive note, NS&I’s research suggests that public understanding of financial products is increasing. Almost 15% surveyed three years ago admitted that they didn’t even know what an ISA was – a figure that has now fallen to 6%. Savers also seem more risk-averse than in past years. Just over 25% of those interviewed said that they would choose a cash ISA as opposed to an investment ISA, citing the more volatile, higher risk nature of the stock market as the reason for this. This has increased from 21% last year.

Encouraging signs

Commenting on the findings, John Prout, NS&I’s Retail Customer Director, said: “it’s encouraging that almost half of us are utilising the tax-free shelter that ISAs provide.
 
* Source: Survey of 1,206 UK adults, conducted between 5th and 7th February 2013. 


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Income Investment ISAs
ProviderPlan NameCounterpartyISA OptionTermMaximum Potential IncomeMore Info
FTSE Dual Option Contingent Income PlanNatixisyesUp to 6 years

7.00%

per annum

More Info >
Maximum 6 year structured investment plan paying a potential quarterly income of 1.75% (equivalent to 7% annually) and the opportunity to mature early from year 2 onwards. Also available as a Stocks & Shares ISA investment and ISA transfer.
FTSE 100 Kick-Out Income PlanInvestec Bank plcyes6 years

7.00%

per annum

More Info >
6 year investment plan paying a potential quarterly income of 1.75% (equivalent to 7% annually). Available as a Stocks & Shares ISA, non-ISA investment and ISA transfer.
FTSE Contingent Income PlanCredit Suisse AGyesUp to
6 years

6.56%

per annum

More Info >
A maximum 6 year investment plan paying a potential quarterly income of 1.64% (equivalent to 6.56% per year) and the opportunity to mature early. Also available for Stocks & Shares ISA and ISA transfer.
Important Information: Structured investment plans are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. Income and growth returns are not guaranteed. There is a risk of losing some or all of your initial investment due to the performance of the underlying investment. There is also a risk that the company backing the plan known as the Counterparty may be unable to repay your initial investment and any returns stated.