Savers have handed the taxman an estimated £13bn by not making the most of their tax-free savings allowance, according to Clydesdale and Yorkshire Banks. Since the launch of Individual Savings Accounts (ISAs) in 1999, savers have invested only one-sixth of what they could have, meaning millions have been paying unneccessary tax.
The total ISA allowance available to taxpayers since its launch is approximately £2,305bn. However, it is estimated that, by the end of this tax year, only £350bn will have been invested in ISAs, around 15 per cent of the tax-free saving available.
"An ISA should form the basis of any taxpayer's savings portfolio," says Steve Reid, retail director for Clydesdale Bank. "By not taking advantage of these tax-free accounts savers have potentially lost billions of pounds in tax they need not have incurred."
If you are over 50 the amount you can stash in an ISA is now £10,200, and all savers and investors will have the same limit from April. With the increased allowance in 2010-11, savers will lose an estimated £1.7bn in tax-free interest from their savings and investments in the new tax year. "With the new, higher allowances from April, the advantages of ISAs are even greater," adds Reid.