British savers neglecting ISA savings allowances

Savers in the UK are by and large neglecting their ISA savings allowances, with only around 50 per cent of those surveyed planning on using cash ISAs in the coming tax year, with the result being as much as £182 billion is being sacrificed on the altar of difficult financial times.

A recently conducted survey found that only 42 per cent of savers feel that they need to take full advantage of their annual tax-free savings account allowance.  A further one out of every three had plans to put less than £2,000 into savings over the coming year, while a significant number of respondents will be withdrawing cash this April in order to aid in debt settlements.

The overwhelming majority of Brits are aware of the current ISA limit, indicating that the 78 per cent who know how much they can deposit are instead prioritising paying down debt or making ends meet over growing savings pots, experts say.  Out of those savers with plans to make ISA deposits, nearly 3 out of every 10 of them are planning to deposit less than £1,000 into the accounts in the 2012-2013 financial year, while 25 per cent of respondents said that they either could not or would not increase their ISA deposits by sacrificing in another area of their finances.

Many experts attribute this unwillingness on the part of savers to make use of ISA savings because of the relatively poor return on investment.  With the Bank of England’s Monetary Policy Committee continuously voting to keep the base rate at 0.5 per cent month after month, ISA interest rates suffered, with one report dating November of last year demonstrating that the annual cash ISA return was a paltry 0.55 per cent.

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