Savers are being urged to use their ISA allowances after research from HSBC revealed that Brits are set to pay more than £9billion in tax on returns from savings this year.
Currently, only 50 per cent of savers have a cash ISA, according to HSBC, and with the end of the tax year fast approaching on 5 April, savers are being encouraged not to waste their £3,600 tax free allowance.
Since their launch in 1999, cash ISAs have proved popular with savers, providing a 'tax-wrapper' that shelters any interest earned from tax and with the increased cash ISA allowance of £5,100 set to be introduced from 6 April, it has provided an even greater incentive for savers to open an ISA.
However, despite savers being able to shelter more than £40,000 from the taxman if they have used their full cash ISA allowance every year since 1999, HSBC has discovered that in reality the average cash ISA balance is far less, standing at around £6,500.
Commenting, David Wells, head of savings, investments and pensions at HSBC, believes a cash ISA is the "first savings product that any tax-payer should have".
"The simplicity and accessibility of the ISA scheme has been a great factor in improving the savings culture in the UK. In a very low interest rate environment, using the government's ISA scheme can be a great way to boost your savings," he said, before adding:
"I would recommend anyone over the age of 16 who has not yet taken out a cash ISA to do so before the end of the tax year on 5 April. Those who are aged under 50 will see their cash ISA allowance increase to £5,100 from 6 April."
© Fair Investment Company Ltd