Britons Missing Out On Tax Free Savings

by Jason Gorringe, Tax-News.com, London

18 August 2010

Over 2.6 million UK savers with tax-free cash ISAs (Individual Savings Accounts) could be missing out on tax savings of GBP362m (USD565.5m) during 2010 by not availing of the new GBP5,100 cash ISA allowance, a new study has warned.

According to research by Money Supermarket, more than half of UK respondents said they expected not to utilize their full GBP5,100 cash ISA allowance this fiscal year, while 15% said they would not save any additional funds above the previous limit. It is anticipated that those availing of the allowance could receive around GBP138 in tax-free interest.

Kevin Mountford, Head of Banking at moneysupermarket.com, commented: "It is a sign of the times that many traditional ISA savers are deciding not to utilize their tax free allowance this year. The current economic uncertainty and rising cost of living is really putting pressure on many households' disposable income and unfortunately it is savings that tend to suffer when times are tough. However, it is important to try and put some money aside for a rainy day, which can tide you over should your circumstances change. Having at least three months' of outgoings in savings is important and utilizing your tax free allowance will ensure you are maximizing the returns. More importantly, easy access cash ISAs allow you to immediately access your funds should you need them, which is an important consideration for many savers.”

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