In the 2008/2009 tax year, 1.2 million Brits lost out on the full returns from last year's tax-free savings allowance by leaving it till the last minute to pay into a cash ISA.
Each year people rush to get their finances in order before the new tax year, but Abbey is urging them to change their ways and "start the new tax year as they mean to go on" by starting to pay into a cash ISA
The last year has seen lower than usual rates offered on cash ISAs and savings accounts
, due the falling base rate, and the credit crunch has also meant that people do not have as much money to save as they might have done in previous years.
Abbey's research found that only a third of savers earned the maximum tax-free returns on their cash savings in 2008/2009 by paying in a lump sum into an ISA
this time last year.
The average amount saved in a cash ISA in the last tax year was £2,082, Abbey's research revealed, much less than the maximum £3,600 tax-free savings allowance; 28 per cent of savers are still unsure whether or not they will be putting money into a cash ISA during the 2009/2010 tax year.
"In the current climate, every penny counts so making your savings work hard for you all year round is crucial," said Reza Attar-Zadeh, director of Abbey savings accounts
. "A cash ISA is a great way to make sure the taxman doesn't get his hands on the interest you get on your hard earned money. The new tax year is now here and the sooner an ISA is funded, the greater the return on the money saved.
"Abbey offers a highly attractive range of cash ISAs," Ms Attar-Zadeh continued, such as the Abbey Reward ISA
, with a tax-free interest rate of 3.50 per cent AER.
"A lower rate tax payer would have to find a standard savings account paying 4.37 per cent to earn the same annual return as that offered by Reward ISA, she said. "Savers can open a cash ISA with as little as £1 so there's no excuse to delay opening a tax-free home for your savings."
Apply online for an Abbey Reward ISA
or compare cash ISAs
© Fair Investment