Savings

Research from Nationwide Building Society has revealed that almost two-thirds of people do not have an Individual Savings Account (ISA).

This follows the recent Budget where the Government failed to introduce additional flexibility to the savings regime to help encourage more people to make use of their ISA allowance.

The research reveals 62% of people do not have an ISA. Of those that do not have one, half say they dont have enough money to save in an ISA, one-fifth need to access their money so save elsewhere, despite ISAs being instant access and 17% do not understand them so have opted not to take one out.

Interestingly, the research also shows a third of people who do not have an ISA, save up to £1,000 each year in other savings vehicles. Therefore, they are losing over £10 in unnecessary tax each year. Nationwide believes it is important that more is done to encourage people to use their ISA allowance, no matter how much money they have to put by.

Matthew Carter, director for savings at Nationwide, said: Its a concern that two thirds of people do not have an ISA. They were introduced 10 years ago and yet some people still do not understand them or feel they havent enough money to invest in them. We want people to understand that anyone can take advantage of tax-efficient savings, no matter how much money they have to save. Its also important to inform would-be savers, worried that their money is tied up, that all ISAs are instant access.

Nationwide has now called on the Chancellor twice to reform ISAs by equalising and index-linking limits. We have also called for a withdrawal buffer that allows savers to make withdrawals and replenish their ISA within the same tax year. This would particularly help people on lower incomes and encourage those that need access to their money to open an ISA.