-Only 37% of tax payers subscribed to a cash ISA in 2008/09
-More than £15billion ‘lost’ due to unused cash ISA allowances in 2008/09
-Only 15 days left to use 2009/10 ISA allowance
Only 37% of UK tax payers subscribed to a cash ISA in 2008/09, throwing away an estimated £15.5 billion in unnecessary tax payments*.
"There are around 30 million tax payers in the UK all of whom are eligible for a tax free cash ISA account, but only 11.3million cash ISA accounts were opened in the UK in 2008/09," explains Nick Scarrett, head of investment and pensions at Fair Investment Company, "which means only just over a third of us made use of our ISA allowance.
"Obviously it is not realistic to assume that every tax paying adult in the UK will use their full cash ISA allowance, but these figures do highlight the fact that by paying tax on the money they could have saved in an ISA, UK taxpayers have thrown away billions of pounds in tax payments."
Nick urges those who have not used their ISA allowance at all this year to do so now before the Easter deadline, because although you can transfer previous years' allowances at anytime, you will need to invest in the current tax year's ISA by April 5th (and because of the Easter break, the last working day is actually April 1st ) to take advantage of its tax free status.
"The 2009/10 tax year ends on April 5th; once the deadline is passed, the tax-free allowance for the current year can never be clawed back," says Nick, "so if you do want to make the most of it, get investing - if you don't use it, you lose it."
For those who have already invested in a cash ISA but are not happy with the rates, Nick urges them to at least consider transferring their money into a better paying cash ISA like the market leading RBS’ Royal Deposit ISA, or for potentially higher returns, consider investing in or transferring into a stocks and shares ISA.
Of those who invested in an ISA in 2008/09, the vast majority invested in a cash ISA account – 79.6% of all ISA investments were cash ISAs. Only 2.9million stocks and shares ISAs were opened (just over 20% of all ISAs), which means there are also millions of people who could be making use of their entire £7,200 allowance, but aren’t.
"Although most people who have an ISA have a cash ISA, investors shouldn’t dismiss stocks and shares ISAs,” he says. “It is important that investors understand the risks, but stocks and shares ISAs can be a good option for many people, especially while cash ISA rates are so low."
He continues, "there are lots of investment options within a stocks and shares ISA, including corporate bond funds, structured products and absolute return funds, which aim to provide either an income or capital growth (or a combination of the two), in good times and in bad."