Two thirds of Britons fail to take advantage of tax free ISA

17 March 2008 / by Rebecca Sargent
According to research from Nationwide Building Society, two thirds of people still do not have an ISA.

Despite the introduction of new ISAs with higher rates from several high street providers, 62 per cent of Britons are still failing to capitalise from the tax free opportunity.

The research revealed that half of those who do not have an ISA gave insufficient funds as the reason, despite the fact that many ISAs can be opened with just £1.

A further 18 per cent of those questioned confessed they needed instant access to their savings and for this reason did not put them in an ISA, however, many ISAs allow instant access to funds.

A further 17 per cent of participants admitted they do not have an ISA because they do not understand how to use them, highlighting the need for the explanation and simplification of ISAs.

Nationwide also found that a third of those without an ISA did have savings of up to £1,000 per year held in a non ISA account, meaning they are losing around £10 per year in unnecessary tax.

Consequently, Nationwide believes more should be done to encourage people to use their tax free savings opportunity.

The results also showed that another third of Britons questioned did not have any savings at all, a worrying statistic, according to Nationwide, who are subsequently calling for the Government to simplify ISAs and encourage their use.

Matthew Carter, director for savings at Nationwide, said: "It's a concern that two thirds of people do not have an ISA. ISAs were introduced 10 years ago and yet some people still do not understand them or feel they haven't enough money to invest in them.

We want people to understand that anyone can take advantage of tax-efficient savings, no matter how much money they have to save. It's also important to inform would-be savers, worried that their money is tied up, that all ISAs are instant access.

"We look to the Government to take action and encourage more people to use their ISA allowance and listen to the industry when deciding how to move the savings vehicle into the 21st century," Mr Carter concluded.

With ISAs set to change on April 6th, Fairinvestment.co.uk has produced a free online guide to help clarify ISAs and attempt to solve the issues raised by Nationwide; the guide can be downloaded from the website:

Guide to ISA Changes.

© Fair Investment Company Ltd