- Savers losing out on tax free benefits by not investing their allowance
- Many holding out for last minute ISA deals despite lack of movement in the market
Just over half (51 per cent) of the respondents who won't be investing said they simply couldn't afford to save, but a further 24 per cent said they didn't understand ISAs so they avoid them. The remaining 26 per cent said they couldn't be bothered to save at all.
It is not all bad news though with 50 per cent of savvy savers having already invested their allowance for this tax year. The vast majority of these savers (70 per cent) have opted to invest in cash ISAs only, with 19 per cent opting for stocks and shares ISAs. The remainder (11 per cent) have split their allowance between cash and stocks and shares.
With a flat, low Base Rate over the past 12 months, it has been tough for savers and the outlook for 2010 is not much better, especially with a rise in inflation, which erodes the real returns on your savings. For UK tax payers, ISAs are a useful tool to make their savings work harder for them, although savers have to be savvy and shop around for the best deal.
Kevin Mountford, head of banking at moneysupermarket.com said: "If you are a UK taxpayer, it makes total sense to utilise your tax allowance so you can make your savings work harder for you. If you are a higher rate tax payer then it is even more important, and with the new 50 per cent tax bracket coming into force from 6 April, there will be many consumers who will be looking to review their finances to protect against taxation. The ISA allowance for under 50s is increasing to £5,100 from 6 April giving a greater incentive for tax paying savers.
"Savers are quite rightly feeling a little hard done by at the moment but ensuring you're getting the best return on your money is more important than ever in a low-rate environment. ISAs offer a valuable tax-break helps those that are already putting cash aside to save even more. Consumers that can afford to save should be looking at ISAs, no question. Even though rates are low, the benefits of a tax-efficient wrapper should not be overlooked. Savers who have funds in older ISA accounts should remember that in most cases they are able to transfer these funds to their new ISA without losing the tax free status. With many older ISA accounts now paying a pittance it is important to transfer your funds to make the most of this pot."
Eight per cent of the overall respondents to the survey cited a lack of understanding as the main reason for not putting their money into an ISA product. This has been a common problem for consumers since ISAs were introduced in April 1999 and the government has subsequently simplified the rules and increased the amount you can save tax-free.
Kevin Mountford said: "A lot of people are put off investing in ISAs as they do not fully understand them or think they are overly complicated. The abolishment of the mini and maxi distinction will have gone some way to rectify this but clearly there's still some work to be done in educating savers."
The poll also showed that 14 per cent of moneysupermarket.com users are waiting for the best deals before they commit their cash, which are traditionally found towards the end of the financial year. Analysis from moneysupermarket.com has shown that 2010's first wave of cash ISA offerings have been disappointing thus far overall and we have yet to see the ISA season start in earnest as there has been little movement in the best buy tables so far this year.
Kevin Mountford concluded: "Those consumers who adopt a wait and see approach may well be in a better position to secure the best deals. Banks have been relatively luke-warm towards savers this year so it is unclear when the annual ISA season battle will begin. For those who don't want to take the risk of predicting when the best deals will come along, the current top easy access ISA account is First Direct's cash e-ISA paying 2.75 per cent."..
-ENDS-
Top Easy Access ISA Saving Accounts
Based on £3,600
|
Provider |
Account |
AER |
Transfers In |
|
first direct |
cash e-ISA |
2.75% |
Yes |
|
Standard Life Cash |
Direct Access ISA |
2.65% |
Yes |
|
Marks & Spencer Money |
Flexi Cash ISA |
2.65% |
Yes |
|
Barclays |
Golden ISA |
2.58% |
No |
|
Intelligent Finance |
Cash ISA |
2.50% |
Yes |
Sourced by www.moneysupermarket.com 11.02.2010
Top 1 Year Fixed Rate Bond ISA Saving Accounts
Based on £3,600
|
Provider |
Account |
AER |
Transfers In |
|
Cheshire BS |
Fixed Rate Cash ISA |
3.00% |
Yes |
|
Mansfield BS |
Fixed Rate Cash ISA |
3.00% |
No |
|
Julian Hodge Bank |
Fixed Rate Cash ISA |
3.00% |
Yes |
Sourced by www.moneysupermarket.com 11.02.2010
Top 2 Year Fixed Rate Bond ISA Saving Accounts
Based on £3,600
|
Provider |
Account |
AER |
Transfers In |
|
Bank of Scotland |
Fixed Rate ISA Saver |
3.50% |
Yes |
|
Principality BS |
Fixed Rate Cash ISA |
3.50% |
No |
|
Nationwide BS |
Fixed Rate ISA Bond |
3.50% |
Yes |
Sourced by www.moneysupermarket.com 11.02.2010
Top 3 Year Fixed Rate Bond ISA Saving Accounts
Based on £3,600
|
Provider |
Account |
AER |
Transfers In |
|
Marks & Spencer Money |
Fixed Rate Savings |
4.00% |
Yes |
|
Julian Hodge Bank |
Fixed Rate Cash ISA |
3.90% |
Yes |
|
Halifax |
Fixed Rate ISA Saver |
3.75% |
Yes |
Sourced by www.moneysupermarket.com 11.02.2010
Top 5 Year Fixed Rate Bond ISA Saving Accounts
Based on £3,600
|
Provider |
Account |
AER |
Transfers In |
|
Nationwide BS |
Fixed Rate ISA Bond |
4.50% |
Yes |
|
Julian Hodge Bank |
Fixed Rate Cash ISA |
4.40% |
Yes |
Sourced by www.moneysupermarket.com 11.02.2010
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