Tax On Savings
Savers are missing out on over £360m of tax benefits by failing to take out ISAs. Christina Jordan reports
Over 9 million adult savers are unnecessarily paying tax on their savings, costing them over £360 million a year, according to Intelligent Finance.
Over half of savers – 54% – equivalent to almost 9.25 million adults – have not taken out an ISA and are therefore missing out on the tax benefits they bring.
Plus 49% of people with over £2,000 in a savings account – over 4.4 million adults – admit that they have no plans to use their ISA allowance this year. The average amount respondents have saved is £4,327.70, which is below the 2005 average of £5,937, and the 2004 average of £5,180.
Nick Robinson, managing director, Intelligent Finance, said: “A significant number of savers are still losing out when it comes to making the most of their cash. At a time when average savings appear to have fallen, tax-free saving is now more important than ever before. People should seize the opportunity to make their savings work harder for them.
“ISAs are a great way to save, you don’t get taxed on your savings interest, they pay very competitive rates and many allow instant access to cash – they should be every savers first port of call.”
Men on top
Men are more likely to have a savings account than women (42% vs 36%) and average female savings are much lower than average male savings (£2,830.60 compared to £5,715.60). The discrepancy between the two sexes is far more pronounced than in 2005, when average male savings were £6,682 compared to average female savings of £5,112.
Additionally, women are increasingly likely not to have used their ISA allowance. The research shows that 59% of women (up from 49% in 2005), compared to 50% of men, say they have no plans to use their ISA allowance this year or have never taken one out.
Christine Jones, a nursery nurse in Manchester, agrees that women are less likely to save. “Most of the girls I know don’t have the money to save,” she said. “We get paid less for a start. I think that saving is also an age thing as well as a gender issue. I’m in my twenties so it doesn’t feel like a priority, but I’m sure in the next few years I’ll have to think about starting to save.”