As we get closer to the end of another tax year (on 5 April), new research shows that just 34% of Brits have used an ISA over the past 12 months. This means that two-thirds could miss out on this year's £20,000 tax-free savings allowance.
Part of the reason for this apathy towards ISAs may be that people don't believe they have enough money to need this kind of account, which 50% of those surveyed by Aldermore gave as a reason for not using one. After all, thanks to the personal savings allowance, people can earn up to £1,000 in savings interest each year without having to pay tax.
Given that the highest rate currently available on a large pot of money is 2.55% (on a seven-year fixed rate bond), people would need to set aside almost £50,000 before they'd have to start paying tax, so it's perhaps understandable that those with smaller pots question the benefits of an ISA.
However, fixed rates are moving up, which means you may soon use up your personal savings allowance with a much lower sum, and you may want to end up with a larger amount over time anyway. This is where ISAs can really come into their own, as there's no limit on the amount of tax-free interest you can earn, which means your pot can grow over the years and will still be tax-free. Ultimately, if you don't put money aside in an ISA this year, you will lose out on this year's ISA allowance – which can't be used retrospectively – and you'll only be able to set aside £20,000 next year.
Luckily not everyone is apathetic about ISAs, as 39% believe that these tax-free products allow them to make the most of their money, while 13% of respondents still plan to use their full ISA allowance. They won't want to wait too long, however, as it may take a few days to process an application.
The figures went on to reveal that 62% are only using one ISA product to save, despite the numerous options that are now available. The main reason people give for not having more than one ISA is the perceived complexity involved in managing multiple accounts (40%). That may be why 66% would like their main savings provider to launch an ISA portfolio manager, which would allow them to easily manage multiple accounts.
Having more than one ISA could be easier than you think, and the benefits may be worth any hassle, especially with the new Lifetime ISA which allows you to save up to £4,000 per year towards a first home or retirement and get a 25% Government bonus.
If you don't have an ISA (yet), have a look at the Best Buy charts to see if there's one to suit you.
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.