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ISA avoidance wastes £144million in unnecessary tax payments

24 September 2009 / by Andy Davies

As the new ISA limit is set to be launched next month, new research claims Brits are paying £144million in unnecessary tax payments because of their unwillingness to use an ISA.

Unbiased.co.uk has revealed £109million is being wasted by 6.2million investors who do not use a cash ISA to shield their savings from tax, while an additional £35million is being paid out in tax by 1.7million shareholders who have not transferred their holding into an equity ISA.

The professional advice website's findings also show that of the 6.2million savers using a savings or deposit account instead of a cash ISA, nearly 75 per cent of those have added to their accounts during the financial year.

With the new ISA allowance launching on October 6, allowing over 50s to invest up to £10,200 in a stocks and shares ISA and £5,100 in a cash ISA, Unbiased.co.uk is predicting more money to be wasted in tax payments.

Explaining the benefits of holding an ISA, David Elms, chief executive of Unbiased.co.uk, said: "As savings returns continue to dwindle in this low interest environment, it is more important than ever for consumers to be astute when it comes to managing their savings - and make sure they are not paying unnecessary money to the taxman.

"Savers can avoid this pitfall by making sure their savings are kept in a tax efficient vehicle such as an ISA. Consumers should make sure they are using as much of their tax efficient ISA allowance as possible, in order to avoid unnecessary tax payments and get the best return on their cash."

Mr Elms believes savers should consult an independent financial adviser (IFA) to ensure they are managing their finances "as tax efficiently as possible".

"Only an IFA can advise you on how best to manage your savings, investments and retirement funding and avoid tax wastage," he added.

From April next year, all savers can benefit from the new ISA allowances from participating banks and building societies.

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 Product NameISA OptionIncome YieldMore Info
', eventAction: 'Account', eventLabel: 'Schroders Monthly High Income' });">Schroders Monthly High Income Fundyes
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The Schroder Monthly High Income Fund aims to generate a high income, whilst not compromising capital, by investing in a diversified basket of fixed income securities. 100% Discount off Initial Charges.
', eventAction: 'Account', eventLabel: 'Invesco Perpetual Monthly Income Plus' });">Invesco Perpetual Monthly Income Plus Fund ISAyes
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Popular monthly income fund that aims to achieve a high level of income whilst seeking to maximise total return through investing in high yielding corporate and Government bonds, together with UK equities. 100% discount on initial charges.
', eventAction: 'Account', eventLabel: 'Henderson Strategic Bond Fund' });">Henderson Strategic Bond Fundyes
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', eventAction: 'Apply Now', eventLabel: 'Henderson Strategic Bond Fund' });">More Info >
The aim of this fund is to deliver a quarterly income to investors by investing in higher yielding assets, which will include most types of fixed interest securities such as high yield bonds, investment grade bonds and government gilts, as well as having the ability to invest a proportion of the fund in equities. Income is paid to you quarterly.
', eventAction: 'Account', eventLabel: 'Schroders Income Maximiser' });">Schroders Income Maximiseryes
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', eventAction: 'Apply Now', eventLabel: 'Schroders Income Maximiser' });">More Info >
The Schroder Income Maximiser Fund ISA aims to deliver a target income yield of 7% pa, also providing potential capital growth. Income is paid to you quarterly. 100% Discount off Initial Charges.
', eventAction: 'Account', eventLabel: 'Invesco Perpetual Corporate Bond' });">Invesco Perpetual Corporate Bond ISAyes
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This highly popular fund aims to achieve a high level of overall return with relative security to capital. Income Paid to you twice yearly. Up to 100% Discount off the Standard Initial Fund Charge.
', eventAction: 'Account', eventLabel: 'Artemis Income ISA' });">Artemis Income ISAyes
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', eventAction: 'Apply Now', eventLabel: 'Artemis Income ISA' });">More Info >
One of the leading UK Equity Income Funds. The Fund managers hunt out companies with strong free cash flow and solid balance sheets. Income is paid to you twice yearly. 100% Discount off the Standard Initial Fund Charge.
', eventAction: 'Account', eventLabel: 'Jupiter Corporate Bond' });">Jupiter Corporate Bond Fund ISAyes
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', eventAction: 'Apply Now', eventLabel: 'Jupiter Corporate Bond' });">More Info >
The Jupiter Corporate Bond aims to achieve a high level of income with the opportunity for capital growth, through mainly investing in fixed interest securities. Income is paid to you twice yearly. 87.5% Discount off the Standard Initial Fund Charge.
', eventAction: 'Account', eventLabel: 'invesco perpetual high income' });">Invesco Perpetual High Income Fund ISAyes
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', eventAction: 'Apply Now', eventLabel: 'invesco perpetual high income' });">More Info >
One of the UK's most popular income fund ISAs the Invesco Perpetual High Income has delivered consistently good long term returns through a variety of market conditions. Income is paid to you twice yearly. Up to a 100% Discount off the Standard Initial Fund Charge.
', eventAction: 'Account', eventLabel: 'MandG Corporate Bond' });">M&G Corporate Bond ISAyes
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The M&G Corporate Bond Fund is a conservative ‘blue chip’ sterling fund that aims to produce a higher return than UK government bonds. Income is Paid to you Quarterly. 100% Discount off the Standard Initial Fund Charge.
', eventAction: 'Account', eventLabel: 'Jupiter Merlin Income' });">Jupiter Merlin Income Portfolioyes
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', eventAction: 'Apply Now', eventLabel: 'Jupiter Merlin Income' });">More Info >
The Jupiter Merlin Income Portfolio fund aims to achieve a high and rising income with some potential for capital growth. Income Distributions are made to you quarterly. 95% Discount off the Standard Initial Fund Charge.
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†† Income payments are dependent upon the FTSE 100 Index.

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