Recently released figures suggest the UK could be on course for a record breaking take up of ISA savings accounts, with 5.6 million people setting up an account in the first quarter alone.
This is a 13.1 per cent rise on the same period of last year. Overall, some 7.6 million people put money into an ISA between April 6 and July 5, 2005, a 7.45 per cent increase on the 7.1 million savers of a year before.
ICM research has also revealed that ISAs are fulfilling their intention of supplying tax free savings to earners across society and not just the well heeled.
Over the last year 4.2 million in the lower to middle income bracket intended to either open an ISA or use their ISA allowance. The simplicity of mini-cash ISAs has made them a far more popular choice than maxi-ISAs, outnumbering maxi-ISAs by around five to one.
The savings accounts are also more popular among older generations, with 31 per cent the 45 ñ64 age bracket having used their ISA allowance over the previous year.
People in the 55-64 age bracket were most likely to have gone for a mini-cash ISA, with 84 per cent of those opting for an ISA doing so.
“These figures suggest we could be on for a record year. We know that people across a range of ages and life stages opt for ISAs as they are a great way to save, you donít get taxed on your savings interest, they pay very competitive rates and many allow instant access to cash, said Nick Robinson, managing director of Intelligent Finance.
“We are constantly advising people to save more and if we want to encourage more of this then it’s important that they, not the taxman, should see the benefits of their savings,” he added.
Intelligent Finance has estimated that someone on a lower rate of tax who invested £3,000 in an ISA every year would enjoy tax benefits of £1,726.35 over ten years, £7,782.67 over 20 years and £20,595.54 over 30 years.
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