Savers still handing an unnecessary gift to the tax man

New research conducted on behalf of Fidelity Investment Managers shows that while nine out of ten people are saving, most are not maximising their returns or taking advantage of the tax breaks open to them.

To mark the anniversary of the first phase of the increased ISA allowance, Fidelity is calling on the industry to make the 6th October a date to remember - and to encourage investors to make the most of their ISA.

This time last year saw a significant rise in ISA investors, as people rushed to take advantage of the increased allowance for over 50's. But the anniversary has done little to encourage investors to invest early this year, with the research showing that fewer than 3% of people in the UK will choose to buy their ISA in October this year.

The research also shows that 42% of people in the UK are missing out on tax breaks by not using their annual ISA allowance and only one in ten is choosing to maximise their savings in a stocks and shares ISA.

Tom Stevenson, Investment Director at Fidelity Investment Managers said: "ISAs are a year-round investment and shouldn't just be considered at the beginning or end of the tax year.  Last year we saw unprecedented levels of ISA investments in October, generated by the increased allowance for over 50's.  It is disappointing to see that the same interest will probably not be repeated this year, and that people are simply not making the most of their ISA.

"Despite the fact that many millions of people do contribute to ISAs, many millions more are missing out and unnecessarily handing over their hard earned money to the taxman. ISAs are a fantastic use-it-or-lose-it tax perk - no further tax to pay ever, and a generous £20,400 allowance for a couple, but no way back if you let the tax year pass without taking up your allowance.

"We would encourage those people that habitually leave it to the end of the tax year to remember the difference that investing earlier can make - put simply, it gives your money more time to grow in the market over the long run.  Our analysis shows that those who have historically chosen autumn for their investment, rather than leaving it to the last minute, could have gained more than  £8,400 extra.  This is on the basis of the investment growth of the FTSE All Share over 15 years - investors choosing a more aggressive, actively managed fund, such as Fidelity's Special Situations Fund could have seen an extra £26,330 over the same period."