Despite reform, two-thirds of people still do not have an ISA

Almost two thirds of people (62%) do not have an ISA, according to research from Nationwide Building Society. This follows last week's 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 two thirds (62%) of people do not have an ISA. Of those that do not have an ISA:

Half (50%) say they haven't enough money to save in an ISA;
One fifth (18%) need to access their money so save elsewhere, despite ISAs being instant access;
Just under one fifth (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.

Worryingly, the research also reveals that a third of people who do not have an ISA, do not save any money at all and the Society is keen to see the Government simplify ISAs and engage all those who would benefit from tax-efficient savings.

Matthew Carter, director for savings at Nationwide, says: "It's a concern that two thirds of people do not have an ISA. ISAs were introduced 10 years ago and yet some people still do not understand them or feel they haven't 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. It's 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.

"We look to the Government to take action and encourage more people to use their ISA allowance and listen to the industry when deciding how to move the savings vehicle into the 21st century."