Brits may lose £3 billion by not using ISA allowance

Britons may be losing nearly £3 billion interest by delaying using their yearly ISA allowance until April 2008, according to research conducted by Abbey Savings.

A saver who delays depositing the maximum £3,000 into a Mini Cash ISA from 6 April 2007 to 5 April 2008 could miss out on interest of £243.00. With 12 million Cash ISA savers in the UK, the potential lost interest could amount to £2916 million.

Reza Attar Zadeh, Head of Savings, said:”Mini Cash ISA rates are better than they have ever been. Many people leave saving in a Mini cash ISA to the end of tax year. However, people that leave saving in an ISA to the last minute face losing a significant amount of interest throughout the year. Additionally, the competitive deals that are currently available may not be available next year.

“It is important to remember that people can use their £3,000 tax-free ISA allowance at any time, not just at the tax-year end.”

Abbey currently offers three cash ISA products – the Abbey Super ISA, Abbey Direct ISA and Abbey Easy ISA.

The Super ISA is a Mini Cash ISA and offers 8.1 per cent AER tax-free until 1 May 2008 if customers put an equal amount or more into Abbey’s tax efficient Guaranteed Growth Plan.

The Super ISA is designed to help customers build their savings in a tax-efficient way, while offering certainty of return. The product allows instant access to money placed in the Super ISA offering 8.1 per cent interest, whilst deposits in the Guaranteed Growth Plan are invested for the longer term (three or 5.5 years) offering guarantees both on the money deposited and a minimum return, if the money is left for the full term. The product allows transfers in of existing ISA balances customers may already hold.

Abbey’s Direct ISA account pays 5.50 per cent tax-free/AER on balances from £1. The account offers a market-leading rate of 5.75 per cent tax-free/AER for balances over £9,000. The ISA is available to both new and existing customers and offers a cash card to help people who intend to make occasional withdrawals. The account offers customers instant access to funds through post, telephone, ATM or online. The minimum opening balance is £1 and transfers can be made into the account from other ISAs.