Home Business News Just 39% of people made ‘use of their ISA allowance in the last tax year’

Just 39% of people made ‘use of their ISA allowance in the last tax year’

by Thea Coates Finance Reporter
16th Apr 24 9:03 am

The latest research by peer-to-peer real estate investment platform, easyMoney, reveals that just 39% of us made use of our tax-free ISA allowance last year.

Only 57% were also unaware of the recently announced British ISA, which will allow an additional £5,000 of tax-free investment (into UK equities).

easyMoney has commissioned a survey of 1,079 members of the UK population to gain insight into how many people are already making full use of their existing ISA allowance, and how many intend to make use of the new British ISA when it is rolled out.

The survey found that 61% of people in the UK put no money whatsoever into an ISA during the last tax year. 23% invested some money into an ISA, while just 16% report to have invested the maximum amount of £20,000.

Among those who did not maximise their ISA allowance last year, the overwhelming majority say it’s because they lack the required disposable income to do so, a sure sign that the ongoing cost of living crisis is having a real impact on people’s ability to save for the future.

And with the cost of living set to remain high for the foreseeable future, 75% of people say they have no intention to maximise their ISA allowance in this new financial year that’s just started, with 83% once again reporting that it’s due to a lack of disposable income.

In the government’s recent Spring Budget, a new British ISA was announced which will give investors an additional £5,000 tax-free ISA allowance – on top of their existing £20,000 – when investing in British entities..

When presented with the subject of the recently announced British ISA, almost 60% (57%) said they were unaware of its existence and didn’t, therefore, know about the additional £5,000 ISA allowance it will provide.

However, even when made aware of the British ISA, it seems the vast majority of people have little intention to take advantage of it, with 81% saying they have no plans to invest in the new scheme.

Jason Ferrando, CEO of easyMoney said, “ISA investment is a great way for people with all sorts of levels of wealth to make their money work for them, but for most people nowadays, disposable income is really hard to come by. And at times like this, investing and saving is very much a luxury, so it’s little surprise to see many people tuned out of the ISA investment world.

The launch of the British ISA demonstrated just how far the profile of ISA investment has come in a few short years and not only is the additional tax-free allowance great news for investors, but further diversification of the ISA offering is also a positive. However, it seems as though the uptake will be initially slim, with the majority of savers opting not to utilise this product when it is launched.”

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