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Savers told to make full use of ISAs

Savers told to make full use of ISAs

Category: Savings

Updated: 16/02/2010
First Published: 16/02/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Savers are being encouraged to make full use of their annual ISA allowance, after a significant gap was revealed between the potential and actual amounts invested.

UK savers will have invested an estimated £40 billion in around 14.8 million ISA accounts by the end of the tax year on 5 April 2010, according to Clydesdale and Yorkshire Banks.

In their first 1999/2000 tax year, 9.3 million accounts were opened, with total investments of £28.4 billion.

However, while the number of accounts opened and amounts invested have both increased, they have not been rising at the same rate.

Despite the amount allowed to be invested in ISAs having increased since their launch, it is estimated that this year the average investment will be approximately £2,700, a fall of 10% on the average of £3,063 invested in 1999/2000.

Since ISAs were introduced, the average annual investment is estimated to be just £2,498, little more than a third of the allowance.

"Clearly, ISAs have been a success, with so much invested in them," said Steve Reid, retail director for Clydesdale Bank. "However, there is a huge gap between what could have been invested in them and what actually has been.

"With an average investment of less than half the allowance and only one in four adults taking advantage of ISAs' tax-free status, savers are losing millions in tax unnecessarily."

The ISA limit was increased from £7,200 to £10,200 for savers born on or before 5 April 1960 in October last year, with £5,100 of this allowed to be invested in a cash ISA (previously £3,600).

The improved limits will apply to all ISA savers with effect from 6 April 2010.

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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