ISA warning: 53% of British adults could be making a huge mistake

With the new tax year upon us, ISA allowances have now reset.

In the UK, you can put up to £20,000 in an ISA without having to pay any tax on it, which is a great way to invest and save.

But, how much do Brits know about ISAs and how many are actually using them to grow their savings?

A study from Shepherds Friendly found the following when it comes to Brits and ISAs:

• Over half of adult Brits don’t currently have an ISA (53%) with three in five of those aged 55 and over not having one, making this the least likely generation to do so.
• One in five have set up a cash ISA during the cost of living crisis in order to try and get better at saving money.
• Although over a quarter (27%) believe having a cash ISA is the best way to save money, almost two thirds aren’t confident in their knowledge of cash ISAs.
• Just one in seven Brits use all of their yearly ISA allowance (£20,000).

• The research also revealed that those who don’t have an ISA are twice as likely to dip into their savings compared to those that do have an ISA, suggesting ISAs can be beneficial for helping Brits stick to their savings goals.

With that said, the study has also revealed some interesting stats around Britain’s saving habits:

• One in seven have nothing at all in their savings.
• Nearly half (46%) of Brits are cutting down on takeaways to save more this year.
• Brits think they need to have around £35,366 saved in order to feel financially secure in the current financial climate. This is nearly £7,000 more than they felt they needed before the cost of living crisis.
• One in six people say they have found it impossible to save money during the cost of living crisis.

Derence Lee, Chief Finance Officer at Shepherds Friendly highlights the importance of ISAs for helping you to grow your long-term savings.

Lee said, “Saving money can be a challenge for many of us, even more so in the context of the current financial climate.

“Setting up an ISA can be a great way to help encourage you to build your savings, allowing you to save up to £20,000 tax free each year.

“There are several different ISA options to choose from depending on your savings goals, including stocks and shares ISAs that allow you to invest in shares, funds, bonds, and other assets without paying capital gains tax, to junior ISAs that help you to save for your child’s future.”