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ISA inertia will cost Britons £35 million in unnecessary tax payments this year

·  A massive 5.9 million UK adults have a savings or deposit account - but no ISA

·  Only one in ten consumers say the increase to ISA limits will definitely make them save more

·  14 days left to contribute to this year’s ISA allowance

With the deadline fast approaching to make full use of this year’s ISA allowance, research* by unbiased.co.uk, the professional advice website, reveals Britons are set to waste a huge £35 million in tax this year by not putting their savings and investments in a tax-efficient savings account such as an ISA.

Despite ISA limits increasing for everyone in the new tax year from £7,200 to £10,200 only one in ten** (10%) consumers said this increase to ISA limits will definitely make them save more.  A further third (32%) said the new limits could possibly make them save more.  Even more worryingly, two in five (41%) consumers do not think these new limits will cause them to improve their savings habits. 

ISAs were introduced in April 1999, allowing tax favoured investments and savings to be made in two main areas of cash and equities. April 5th 2010 is the deadline for individuals to contribute up to their annual limit (£3,600 for cash ISAs; £7,200 for equity ISAs) for this tax year. Savers aged 50 and over have had a head-start on the increased ISA limits which allow £10,200 to be saved (of which £5,100 can be held in cash). 

Unbiased.co.uk’s research reveals 5.9 million adults have a savings or deposit account - yet no ISA. According to the Office for National Statistics, over 4 million of these savers are estimated to have deposited an average of £1,787 each into these accounts during the past year.  If just £1,500 of this had instead been invested into cash ISA returning 0.41%, then the average saving in tax would be £1.72 per investor.  Therefore by adults failing to save through tax efficient ISAs, a total of £15 million has been lost overall in error waste.

If the 1.5 million holders of shares outside ISAs took the decision to transfer an average of £4,000 of their holdings into an equity ISA, the tax saving generated would be £13 per individual.  In total this is equivalent to £20 million in avoidable waste. 

In total, not taking advantage of the tax breaks available through both cash and equity ISAs costs Britons £35 million in unnecessary tax payments.

Karen Barrett, Chief Executive of unbiased.co.uk commented: “With experts reporting that interest rates could remain very low for the foreseeable future, it is more crucial than ever for consumers to make sure their savings are working hard for them. With increased ISA limits available to those aged 50 and over – soon to be available to all from 6th April – now is the time to take advantage of tax efficient saving and ensure you are not gifting unnecessary money to the taxman. Savers should use the time they have before the tax year end to make sure they have made the best use possible of their annual ISA allowance.

“To ensure you’re managing your personal finances as tax efficiently as possible, an independent financial adviser can offer invaluable advice on how to maximise your ISA allowance before the deadline. With the ISA limit increasing to £10,200 from 6th April 2010, now is the time to seek independent financial advice to ensure you are making the most of the tax breaks available to you.  You can carry out a free and confidential search at unbiased.co.uk to find an independent financial adviser near you.”

ENDS

*Tax Action 2010 report produced for IFA Promotion by RAKM, based on a specially commissioned analysis of HMRC and a range of other official data sources

** Opinium Research carried out an online poll of 2,065 UK adults aged 18+ from 16th to 19th February 2010  

For further information on unbiased.co.uk, the professional advice website pleases contact:

Sign up to unbiased.co.uk’s unique Professional Connections service, allowing IFAs, mortgage brokers and solicitors to find and link up with other professional advisers across the UK to expand their current business network.

For expert commentary or case studies from over 150 media-friendly IFAs, journalists should visit www.unbiased.co.uk/bluebook to search the Blue Book Media IFA database.

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1.         List and store all your IFA contacts in one place.  As well as having access to the whole Media IFA database on the Blue Book, you can also separately list your favourite Media IFAs.  You can add confidential, personalised post-it notes with extra details to Media IFA profiles.  These will be saved and always appear every time you log back into your account.

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Notes to Editors

Unbiased.co.uk, the professional advice website

Unbiased.co.uk is the free and confidential UK-wide search service matching consumers with the most appropriate local professional advisers for their needs.  In 2008, unbiased.co.uk fulfilled over half a million searches for local, professional advice. 

The portal currently houses three professional advice searches: ‘find an IFA’, ‘find a mortgage adviser’, and ‘find a solicitor’, and is inviting accountants to sign up for its ‘find an accountant’ service.  These searches enable consumers to find relevant professional advisers by postcode, area of specialism and payment method, amongst other options. 

IFA Promotion, the organisation behind unbiased.co.uk, is now in its 20th year, and was set up to promote the benefits of independent financial advice to the consumer. 

Unbiased.co.uk’s product provider sponsors

Registered Office: unbiased.co.uk is the consumer brand of IFA Promotion Ltd, 90 St. Vincent Street, Glasgow G2 5UB. Registered in Scotland: No. 114606