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Cash Isas 'could save Brits £15bn'

By Sarah Engle, Thu 18 Mar 2010 - Published in Banking

UK residents could be paying £15 billion in tax unnecessarily because they are not taking advantage of cash Isas, it has been suggested.

Research from the Fair Investment Company found that just 37 per cent of Brits have opened a cash Isa, resulting in a collective tax bill of around £15.5 billion on their savings.

Nick Scarrett, head of investment and pensions at the company, commented: "There are around 30 million tax payers in the UK all of whom are eligible for a tax free cash Isa account, but only 11.3 million cash Isa accounts were opened in the UK in 2008/09."

He also pointed out that it is unrealistic to expect everyone to make full use of an Isa's tax-free allowance, but called on people to recognise they could make significant savings by opening one of the accounts.

A recent poll by Lloyds TSB revealed that 86 per cent of respondents know an Isa is a savings product, but just 11 per cent are aware that the current cash limit is £5,100 for the over-50s and £3,600 for everyone else.