• Only 9.9% of UK taxpayers have stocks and shares ISAs
• Fair Investment Company encourages investors to use ISA allowance before 5 April
• Get income yields of up to 6.50% on stocks and shares ISAs
Savings and investment specialist Fair Investment Company is urging the 90 per cent of taxpayers who don't already make the most of their full £10,200 tax-efficient ISA allowance to do so before it's too late.
"While almost 40 per cent of taxpayers have a cash ISA, less than 10 per cent have a stocks and shares ISA, and considering you can only use up to half of your full £10,200 allowance in a cash ISA but can invest the whole amount in stocks and shares, UK savers are 'wasting' a great deal of money on potentially unnecessary tax payments," explains Julie Smith, savings analyst at Fair Investment Company.
"It's great that 40 per cent of people are using their cash allowance, but to take full advantage of ISAs, they should be looking at using the stocks and shares portion too."
Most people don't invest into a stocks and shares ISA, and, says Julie, there are various reasons for this: "some people can't afford to invest £10,200 a year, for others, stocks and shares investment is simply not suitable – but, even those that do invest into stocks and shares ISAs are not using their full allowance."
The average amount invested into a stocks and shares ISA in 2009/10 was just £4,155, which was only 58 per cent of the previous allowance of £7,200. For cash ISAs, the average amount invested was £2,731; 76 per cent of the previous £3,600 cash ISA allowance.
"I know it is not realistic to assume that everyone can afford to invest the full allowance – which has gone up this tax year from £7,200 to £10,200 – but investing in an ISA, even if it's just a small amount, should really be your first port of call when it comes to saving and investing," says Julie, "because of the tax efficient status an ISA provides.
"When you take into account inflation, currently 4.00%, outside of an ISA, basic tax payers have to be earning 5.00% on their savings and investments just to stop the true value of their money being eroded, for higher rate tax payers it's 6.67%.
"Obviously this means that you need to earn above inflation within an ISA for your money to retain its value in real terms, and it is quite difficult to find cash ISAs that pay more than 4.00%. This is why I am urging people to at least consider the options available within the stocks and shares component too."
As well as some top cash ISA deals, Fair Investment Company has a wide range of investment options to choose from that are available within its stocks and shares ISA wrapper.
"Through Fair Investment, investors can invest their stocks and shares ISA allowance into income producing capital at risk products, like the Investec FTSE 100 Bonus Income Plan which offers a fixed annual income of 6.50% or the RBS UK Fixed Income Plan which offers a fixed annual income of 6.25%," says Julie.
"We also offer access to thousands of growth funds like the Aberdeen Emerging Markets fund, which over five years has returned 109 per cent*, although it should be remembered that past performance should not be seen as a guide to future performance, and the low cost Vanguard Emerging Markets Stock Index, a passive fund that tracks the performance of the MSCI Emerging Markets Index.
"There are also commodities funds, such as the Black Rock Gold and General fund which has significantly outperformed the FTSE Gold mines index over one and five years*."
Julie says she is urging investors to make the most of their ISA allowances before the end of the 2010/11 tax year, because it cannot be carried across to the next tax year.
"Although you can transfer previous years' ISA investments at anytime, you will need to invest in the current tax year's ISA by 5 April 2011," she says, "because once the deadline has passed, the tax-efficient allowance for the current year can never be used again."
For a wide range of cash and stocks and shares ISA options and ideas, visit http://www.fairinvestment.co.uk/isa.aspx