Sixty-one per cent of savers with The Nottingham who have a tax-free ISA account have saved nothing so far this tax year, analysis from the building society revealed.
The Nottingham said ‘ISA season’ starts in March and runs into the new tax year – with savers able to take advantage of the £20,000 tax free savings allowance – but last year, however, just 9% of those investing with the society used up their entire allowance.
The latest analysis was based on data from more than 70,000 saving members of The Nottingham, from 6 April 2019 to 28 February 2020.
“It’s possible one factor that could have impacted people’s likelihood to save and invest in an ISA is the need for access to funds,” The Nottingham savings expert and senior product manager, Jenna McKenzie-Day, commented. “However, there are many types of ISA, including easy access, so money isn’t always tied up as some often believe.
“The coronavirus outbreak has for some brought to the forefront the importance of saving. Although the situation has also understandably impacted many people’s financial resilience and ability to save money, for those who do still want to invest in their ISAs before the end of the tax year (5 April), there is still time to take advantage of their allowance.
“Most should be able to do this without going into a branch, by using online or telephone banking to transfer funds to their savings.”
In terms of the regularity of payments, the data suggested ISA savers were favouring lump sums over a ‘little and often’ approach, as The Nottingham described, with just 16% of savers making three or more contributions, and 23% making one to two payments – outside of the majority who had made no payments at all over the 11-month period analysed in the data.
“Looking at the data, the older you are, the more you are saving which is no surprise, however we were quite surprised at the increase in the average savings balance from those in their thirties to their forties,” McKenzie-Day continued.
“That’s when people seem to wake up to the importance of investing more in their future. Those in their forties could also have more to put away for their retirement or whatever savings goal they are working towards so that could be a factor.”
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