Around a third of Cash ISA savers are not taking full advantage of their tax free allowances, according to research by M&S Money.
By not saving the maximum £3,000 in the current and in previous tax years, says M&S Money, savers with Cash ISAs could have lost out on around £35 each, which is a collective £23million.
"With an estimated 2million new Cash ISAs
to be opened in the current tax year, savers could be losing out on a huge amount of tax free interest," said Brendan Cook, Chief Executive of M& S Money."
And, not only are those with ISAs not taking full advantage of the tax free isa allowances
available to them, but only a third of Brits are using ISAs at all, and many are not aware of the changes; from April 6 2005, the annual ISA investment allowance will be raised from £7,000 to £7,200.
Currently, you may save up to £3,000 of your ISA allowance in cash, either in a Mini Cash ISA
, or as part of a Maxi ISA
where the rest of the allowance is invested in stocks and shares.
From April, you will be entitled to save up to £3,600 of the new £7,200 allowance in cash with one provider; you may then invest the remainder of the £7,200 in stocks and shares with either the same or a different provider.
Other changes include the end of Mini and Maxi ISAs; from April, savers will be able to invest in two separate ISAs each tax year; a cash ISA and a stocks and shares ISA. Mini cash ISAs, TESSA-only ISAs (TOISAs) and the cash component of a Maxi ISA will automatically become cash ISAs, while Mini stocks and shares ISAs and the stocks and shares component of a Maxi ISA will automatically become stocks and shares ISAs.
According to Moneysupermarket.com, only 32 per cent of Brits plan to invest in an ISA this year, and only 27 per cent of people know the allowance for these tax free investments will be increased this year.
"It is disappointing so many Brits won't take advantage of this excellent savings vehicle. With just a third of people looking to utilize their tax free ISA allowance it looks like many people will miss out," said Kevin Mountford, head of savings at moneysupermarket.com.
"Diligent savers can put away a tidy sum if they regularly invest in their ISA – especially now the tax free limit has been increased to £3,600. But I am concerned so few people are aware of this uplift. The extra 20 per cent they can save could really boost gains over the years."
And M&S Money's Mr Cook continued, "we urge savers to take more interest in their savings and make full use of their Cash ISA allowance, particularly from April 6th when the allowance will be even more generous at £3,600 a year."
© Fair Investment Company Ltd