Increasing number don’t have spare cash for ISA

The study suggests that too many Britons are missing out on the opportunity to build up their tax-free savings, during a period of economic uncertainty. However, the research also found there has been an increase in the number of people who will use at least some of their annual ISA allowance.

Just under a fifth (18 per cent) of respondents said they will use some of their allowance in this tax year, compared with 16 per cent last year and 15 per cent in 2009/10. According to the survey, just under a quarter of Britons (24 per cent) will take advantage of their full ISA allowance of £11,280 in this tax year, a decrease from 28 per cent in 2011/12.

An NS&I spokesman said: “In fact, an increasing number of Britons say they will be unable to invest in an ISA at all, stating they cannot afford to.

“Just under a third of Britons (32 per cent) are not investing in an ISA, as they do not have the money to put aside. This figure has increased from 28 per cent last year.”

Those in the 55 to 64 age group are now the most likely to use all or some of their ISA allowance.

John Prout, NS&I’s retail customer director, said: “ISAs are usually the first port of call for people looking to save and it’s encouraging that almost half of us are utilising the tax-free shelter that ISAs provide.

“With the end of the financial year fast approaching, now is an important time for everyone to review their savings.”

According to the study, the tax-free status of an ISA has become even more attractive in recent times.