Savers will pay around £100 million in avoidable tax by failing to take full advantage of their ISA allowance, new research has found.
According to Nationwide Building Society, just one third of the UK adult population currently holds a cash ISA and many of these fail to top up their ISA on a yearly basis.
As a result, the bank estimates that cash ISA holders could fail to top up their accounts by approximately £12 billion in this tax year.
“By saving this £12 billion in non-ISA savings products paying a gross rate of 3.75%, an estimated £100 million could be paid to the tax man unnecessarily in the current year,” says Nationwide savings director Andy McQueen.
Make use of you tax-free allowance
With difficult economic conditions causing a sharp rise in unemployment, it is more important than ever you have a savings pot to fall back on should you find yourself out of work.
ISAs are a great savings scheme as they are completely tax-free, making them particularly attractive to higher rate taxpayers.
You are allowed to save up to £3,600 in a cash ISA each year, and the 2008/09 deadline on April 5 is fast approaching.
Take a look at our cash ISA best buys and make sure you protect your hard-earned savings from the tax man.
Use your investment allowance
Of course, you can invest a further £3,600 tax free sum in a stocks and shares ISA.
With equity markets currently priced at their lowest levels for years, now is potentially a great time to improve the long term value of your nest egg.
If you are comfortable with investing your money on the stock market, why not take a look at our best buy self select ISAs.
