Don't waste your Isa allowance, warns Halifax
The average amount saved into cash Isas for the last tax year (2012/13) was around £3,500, well short of the maximum allowance savers could put away of £5,640.
On average, savers using cash Isas squirrelled away around £290 a month in 2012/2013, said HMRC.
With the deadline for people to use this year's allowance (£5,760) fast approaching, Halifax is urging customers to make full use of it - especially if they have cash in their current accounts earning little interest.
Richard Fearon, head of savings at Halifax, said: "It's a great discipline to look at your finances every year to make sure they're helping you achieve your goals.
"If you can afford it, maximising the amount in your Isa every year is one of the best moves you can make. Likewise if you have money in other accounts, think about transferring the cash into your Isa before the tax year end."
The deadline for you to use this year's allowance is 5 April.
Worryingly, Halifax revealed 66% of people still don't know what a junior Isa (JISA) is, despite their being introduced in November 2011.
Based on the adult account, a Jisa allows parents, grandparents and family friends to help put away cash tax-free for a child.
The allowance for Jisas for the current year is £3,270 but according to the bank only 10% of them were fully used in 2012/13.
Halifax estimates £5.1 billion is wasted in unused junior allowances.
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Available from 1 November 2011, the Junior ISA will replace child trust funds (CFTs), which have been phased out. Junior ISAs will have a £3,000 limit and will be offered by high street banks, building societies and other providers that currently offer ISAs to adults. You can invest in either stocks and shares or cash. But, unlike CTFs, there will be no government contributions into each child’s savings pot. Money invested in Junior ISAs will be “locked in” until the child is 18, and the ISA will default to an adult one.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.