ISAs still unfamiliar territory for many UK savers

Three-quarters of people are unaware of the changes to ISAs which come into force next month, according to research from Nationwide Building Society.

This follows Nationwide's announcement last week that almost two-thirds (62%) of people in the UK still do not have an ISA and, of those, one in five (17%) say it is because they do not understand them.

The Nationwide research also reveals that many people would like to see further changes made to ISAs:

almost half (49%) of people say they would like to see the introduction of a withdrawal buffer, allowing people to make withdrawals and replenish their ISA within the same tax year;

over a third (38%) of people say they would like to see ISA limits index-linked to rise in line with inflation, with a further 56% saying that they would not be against the idea.

With annual subscription limits increasing from £7,000 to £7,200 - with the maximum cash element increasing from £3,000 to £3,600 - people will have the opportunity to invest more in an ISA from 6 April 2008. However, the research from Nationwide worryingly reveals that the majority of people are still unaware of these changes and, therefore, may miss out on the increased tax-efficient benefits available to them in the new financial year.

Matthew Carter, director for savings at Nationwide, says: "We recently announced that around £225 million could be lost to the taxman this financial year by people failing to top up their ISA by the full amount. Unfortunately, this figure is only going to increase if people are not made aware of the changes which come into effect from 6 April - part of which will allow them to save more into a cash or stocks and shares ISA, or a combination of both.

"There are very few opportunities in this world to avoid paying tax but saving or investing in an ISA allows you to do just that. ISAs really can be easy to understand and it is important that more is done to encourage people to use their yearly allowance. Every adult in the UK should have an ISA and we would like to see people fully benefit from this tax-efficient savings vehicle."

For more information, visit nationwide.co.uk.