- Savers should consider using as much of their cash ISA allowance as possible by April 5
- £20k cash ISA allowance could be cut
UK savers on average missed out on tax relief on over £13,100 of their savings last year by not using their full cash ISA allowances, says Lubbock Fine Wealth Management, the wealth management arm of Lubbock Fine, the business advisory and national accountancy firms.
Lubbock Fine says that with the cash ISA’s tax relief reported to be under threat, the average ISA opened last year only had £6,848 deposited into it. The annual ISA tax-free allowance is £20,000, meaning that ISA holders each missed out on tax relief on at least £13,151 of cash savings.
Concerns have emerged in recent days that the Government may be considering reducing the £20,000 cash ISA allowance in order to encourage people to invest more in higher growth assets like shares.
The current £20,000 ISA limit allows people to put money into multiple types of ISAs within the same limit. One proposal floated would be to limit how much of the £20,000 limit can be held as cash.
Andrew Tricker, Director at Lubbock Fine Wealth Management, says that savers planning to use a cash ISA should consider using as much of their cash ISA allowance as they can before the Spring statement on March 26.
If each cash ISA holder had used the full amount of tax relief available to them, another £138bn would have been deposited in cash ISAs last year alone.
Says Andrew Tricker: “When it comes to the cash ISA allowance, savers should use all of it if they can afford to – because they may shortly lose it.”
“The Government is very focused on generating economic growth and the tens of billions of pounds put into cash ISAs each year is a potential source of capital to go into investments that help with that goal. For cash savers however, that might mean losing one of the best tax reliefs they have.”
In recent weeks several personal investment platforms have called for reforms to the ISA system to encourage greater investment in assets such as equities. AJ Bell has called for the Government to merge cash and stocks & shares ISAs into one product to encourage greater retail investment in UK assets.
