Most savers fail to use their full allowance each year – and once it’s gone, it’s gone for good
Most savers fail to use their full allowance each year – and once it’s gone, it’s gone for good(Image: Getty Images)
Savers are at risk of missing out on valuable tax-free returns as the ISA deadline approaches in just a matter of days. With the current tax year ending on April 5, people have a limited window to make use of their £20,000 Individual Savings Account (ISA) allowance, but the vast majority don’t take full advantage.
Figures suggest around 92 per cent of ISA holders fail to use their full allowance each year, potentially costing them thousands of pounds in lost tax-free interest and investment growth over time. Unlike other allowances, any unused ISA allowance does not roll over – meaning once the deadline passes, the opportunity is gone for good.
While many households are still feeling the strain of rising bills and stretched budgets, investment experts say even small contributions can still make a meaningful difference.
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Tomos Russell, portfolio manager at Wealthify, said: “Even adding a small amount before April 5th can help you keep more of your returns tax-free.
“If maxing out your allowance isn’t realistic, increasing your contributions in a way that you can manage can still make a meaningful difference.”
Savers can spread their £20,000 allowance across different types of ISA, including Cash ISAs for short-term goals and Stocks and Shares ISAs for longer-term investing.
A Cash ISA may suit those looking to build up savings for things like emergencies or planned expenses, while a Stocks and Shares ISA can offer the potential for higher returns over time, although investments can go down as well as up.
Acting sooner rather than later is key, as money deposited earlier has more time to grow through interest or investment returns.
Russell said: “Putting money in earlier gives it more time to benefit from compounding, where returns can generate their own returns over time.”
He also urged people to check existing ISA accounts, warning many savers leave money sitting in low-interest accounts without reviewing better options.
Transferring an old ISA into a better-performing account does not affect the current year’s allowance and can be a simple way to improve returns.
With the deadline fast approaching, savers are being warned not to leave it until the last minute, as delays or issues could mean missing out entirely.
Russell added: “Taking action when you can ensures your tax-free allowance is secured before it’s gone.”
