More than one in four UK adults (26%) are paying too much tax on their savings and investments, according to a new report.
Up to 12.5 million people are saving or investing without making use of their tax-free allowances, according to research by NFU Mutual. The new ISA limits come into force on 1st July - you’ll be able to hold more (£15,000 for 2014/15), and more flexibly (in any combination of Stocks and Shares and Cash).
According to HMRC, only 47% of UK adults hold an ISA. Based on 2012 research carried out by financial provider ING, 27% of the adult population have no savings or investments at all. This leaves around 26% who are estimated to be paying tax on their nest egg.
Sean McCann, Chartered Financial Planner at NFU Mutual commented on the findings:
“By not making full use of an ISA allowance, savers and investors could be giving money to the taxman unnecessarily. Putting money in an ISA is one of the simplest things to do to protect your money from the taxman and the rules are set to become even more flexible. Smart investors will have already made full use of this year’s allowance and will be topping up their ISAs when the limit increases. It’s about time more people did the same and stopped needlessly paying too much tax.”
According to another study, just 17% of those with savings know what rate they’re on. 62% of savers use online banking to manage their accounts, but consumer group Which? found a confusing variation in how rates were displayed, with some platforms not displaying savings rates at all.
With the new ISA limits and apparent confusion over savings rates in general, now could be a good time to review your savings and investments products to make sure you’re getting the most for your money. Find out more with our guide to ISA tax savings.