Over £500 million could be lost to the taxman

Over 60% of the UK population still do not hold an ISA while others are failing to top up on a yearly basis.

Nationwide estimates that, during the current tax year (2006-07), savers in the UK could be paying more than £500 million extra in tax by failing to take advantage of their yearly ISA allowance.

As the tax year draws to a close, Nationwide Building Society is urging people to take full advantage of their annual ISA allowance and avoid missing out on tax-free returns on their savings. Over 60% of the UK population still do not hold an ISA and many of those who do hold an account are failing to top up on a yearly basis.

Nationwide estimates that:

Cash ISA holders are failing to top up their accounts by approximately £35.4 billion this tax year. If this money was invested in a non-ISA savings account paying 5%, £354 million would be paid in tax.

Equity ISA holders are also failing to top up their accounts by approximately £17.3 billion this tax year. If this money were to be placed in a non-ISA savings account paying 5% interest, a further £173 million would be paid in tax.

Stuart Bernau, Nationwide’s executive director, said: “With the ISA season drawing to a close, people should act quickly to take advantage of the tax-free savings on offer by using this year’s ISA allowance. Any part of their allowance remaining unused by 5 April will be lost forever. Millions of people fail to do this each year and are simply allowing their hard-earned money to line the Chancellor’s coffers.

“Nationwide offers free expert advice to anyone who wants to find out more about ISAs and has a range of very competitively priced cash and equity ISAs to help members make the most of their allowance. Nationwide’s highly competitive Fixed Rate ISA Bond, offering a guaranteed interest rate of 5.85% for one or two years, is ideal for anyone who wants to invest in cash, while those who prefer to invest in equity have access to a range of stock market based investment products with no initial charge payable.”