Millions unaware of Nisa introduction
With just a week to go before Nisas (New Individual Savings Accounts) come into force, two-thirds of Brits are completely unaware of what's changing.
Nisas will allow people to save up to £15,000 a year tax-free in any combination of cash and stocks and shares as they see fit from Tuesday 1 July.
But research from MoneySuperMarket.com has found that two-thirds of the population (63%) have no idea about the new accounts. And that rises to 68% for 18 to 34 year olds and 70% for 35 to 54 year olds.
Among those aware of the Nisa, lots of people are still unsure about what the changes actually are. A quarter (24%) said they still don't understand the new rules that are being introduced.
Almost a third (30%) that did know how Nisas will work said the changes were unlikely to get them to start saving.
However, there was more positive news among those Brits who are already saving into an Isa. More than a quarter (28%) said they will save more cash because of the increased allowance, with 8% believed they will save up to 10% more than they do now and 6% predicted they will save between 10% and 20% more.
Kevin Mountford, head of banking at MoneySuperMarket, said: "The launch of Nisas is brilliant news for savers, not only will they be able to switch stocks and shares into cash, a move that wasn't possible before 1 July but the annual limit will rise to £15,000.
"With so many people unaware of these rules, more needs to be done to ensure that people will actually reap the rewards."
Anna Bowes, director of savingschampion.co.uk, said that it while it is important for savers to consider a tax-free account, they must shop around to find the best deal.
She added that fixed-rate ISA holders in particular should find out if a new provider will let them top-up ISAs already opened this tax year.
"All the providers are different and it is really important that people with fixed-rate ISAs know when they can top-up. RBS for example is giving customers until 18 July to do so, while others are giving people to the end of July," she said.
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.