74% unaware of new ISA limit

The study highlights that 74% (37.4 million) of people are either mistaken about, or unaware of this year’s annual allowance, which increased from £5,760 to £15,000 in July of last year.

In advance of the 2014/2015 deadline, Santander’s research reveals that 14 million people are planning to make deposits and account applications between now and 5th April. Of these last minute savers, around 2.5 million (18%) say they will open a cash ISA for the first time.  

According to the study, the average amount savers expect to have deposited this tax year is £4,210 – just 28% of the maximum allowance. Around 8% will utilise their entire £15,000 allowance in cash.

Online applications are fast becoming the nation’s first choice for new ISA applications, with 44% of those planning to open a new account between now and 5th April doing so via the internet. By comparison 41% will apply in their local branch and 8% by phone.

Whilst knowledge of the new allowance remains low, the impact on savers who are aware of the changes has been positive. A fifth (18%) say they are saving more as a result of the new higher allowance, a further 18% are using their ISA more than they had previously and 10% are more likely to shop around for an account that offers a competitive rate of interest.

Helen Bierton, Head of Savings at Santander commented:

“Whilst it’s encouraging to see people saving more since the ISA allowance increased last year, it’s really important that people are aware of the new higher allowance. Now is the time for savers to look to make use of their ISA allowances to ensure they take advantage of the tax-free interest available to them and are not paying tax on savings unnecessarily. It’s worth planning ahead this year, as the tax year end also falls over the Easter weekend.”