A new survey has revealed that many ISA holders aren’t aware of what they should do ahead of the tax year end deadline of April 5. That date marks the last day on which ISA holders can reach their £20,000 allowance. According to new research from Charles Stanley, almost one quarter, 24 percent, of ISA savers are not aware there is a tax deadline and are therefore missing out on accuring tax-free interest on their savings.
Younger savers are more in the dark, according to the research. 31 percent of Gen Z ISA savers are unaware of the deadline on April 5. When it comes to millennials, 27 percent say they are unaware. This number drops when looking at Generation X, 22 percent of which say they are unaware of the deadline. 11% of Baby Boomers also say they don’t know about the ISA deadline. Additionally, more than one in 10 (13 percent) who have more than £20,000 in savings are not aware there is a tax deadline for their yearly ISA allowance.
People have been urged to either open up an ISA if they do not have one or top it up to take advantage of their £20,000 savings tax allowance. 28 percent of ISA holders say it prompts them to top up their cash ISA so that their savings are protected. Meanwhile, 20 percent top up their investment ISA so their investments are protected from paying tax on them.
However, 18 percent of respondents said that they cannot fulfill the full ISA allowance of £20,000 and can’t pay more into it than they already do. Furthermore, 17 percent of those who have savings between £15,000 and £20,000 say they know they can’t fulfill the full ISA allowance.
A total of 7 percent of respondents said thay had forgotten about the deadline and that they rush to top it up before it is too late.
The research was conducted by Censuswide, among a sample of 3,001 ‘mass affluent’ consumers who are aged 18 and older and earn more than the UK average pre-tax salary of £33,000 and who have at least £1,000 in accessible cash/savings.
Chief investment analyst at Charles Stanley, Rob Morgan, said: “ISAs have many benefits for savers and investors – they’re tax-efficient, easily accessible, can be used for short and long term goals, and can also be used as a bridge for retirement savings. They’re the Swiss army knife of financial planning and can be used for nearly everyone’s needs and priorities. Yet there are clearly many who don’t know about the ISA deadlines in place. This raises concerns over how many are taking true advantage of their ISA allowance to maximise their savings and build superior compound gains.
“With rumours having also floated around that the Chancellor could make changes to cash ISA limits, it’s even more important that consumers don’t let their savings sit idly and ignore this year’s deadline.”
