Up to £3.8 billion in tax-free interest is being overlooked by 83 per cent of tax payers who do not take out a mini cash individual savings account (ISA).
New research from Portman Building Society reveals that only 11 per cent of the UK adult population has taken out a cash ISA this year.
ISAs allow for tax-free savings of up to £7,000 in a tax year and are available as cash or share schemes.
Based on the current best ISA interest rate of five per cent and as only 17.5 per cent of tax paying adults in the UK have an ISA, researchers estimate that over 25 million people are missing out on a total of £3.8 billion of tax free savings.
Helen Shaw, group communications manager for Portman Building Society, said: “With six months to go until the end of the tax year it is shocking that almost 90 per cent of people have not yet taken out an ISA to make the most of their tax-free savings allowance.
“Cash ISAs are one of the easiest and most efficient ways to save, and for higher rate taxpayers they can offer over three times as much in interest than in a standard instant access account.”
Cash ISAs with a notice period for withdrawals offer even greater savings. The current best buy mini cash ISA with a 60 day notice period for withdrawals offers a rate of 5.2 per cent annual equivalent rate (AER).
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