Brits are set to waste more than £1.3 billion in ISA tax savings this year, new research has found.
Cash ISAs are the biggest area of waste, with £1.2 billion of tax-free allowances left unused, with another £104 million lost by not making the most of stocks and shares ISAs.
The findings come in research published on 16 February by unbiased.co.uk, which helps consumers to find independent professional advisers, and financial services group Prudential.
The organisations are now urging savers to review current arrangements and use as much as they can of their ISA allowances by the 2014-2015 deadline of 5 April 2015. Under current rules, consumers can save up to £15,000 in any combination of a cash ISA and a stocks and shares ISA.
The £1.2 billion figure for cash ISA waste is based on the extra 55 million ISAs that could be opened under current eligibility criteria and the extra interest they could generate in comparison to a standard instant access savings account.
The research also estimated that one million UK households were holding eligible stocks and shares outside an ISA, attracting tax liabilities, rather than taking advantage of their tax-free allowances.
Karen Barrett, chief executive of unbiased.co.uk, said: “Moving your money into tax-efficient ISA accounts is a simple way to make your savings work as hard as possible for you. Although you may not be able to set aside the full amount each year, making sure you are not paying unnecessary tax on your savings will go a long way.”
Les Cameron, tax specialist at Prudential, added: “ISAs are generally regarded as the first step in financial planning. They’re a fairly simple way to protect up to £15,000 of your savings a year from unnecessary taxation.
“While ISAs may be perceived as relatively simple products, financial advice is important to fully understand the range of investments available within the ISA wrapper.
“Independent financial advisers can guide investors through the process of making the investment and tax choices that best suit their own individual circumstances.”