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01 May 2013

Britons Fail To Use ISA Tax Allowance

According to new research from online and telephone bank First Direct, one in four Britons own stocks and shares, but only 14% have taken advantage of the tax free stocks and shares individual savings account (ISA) allowance that they are entitled to.

Nearly 14% of those who have not used their allowance said that they were not aware of how it worked. A further 6% explained that they were put off by the complicated application process and an equal number stated that they had no idea that a stocks and shares ISA allowance existed.

The stocks and shares ISA allowance rose from £11,280 to £11,520 at the start of the new tax year on 6 April, Which? website reported. Experts confirmed that the money invested in stocks and shares ISAs is protected from income and capital gains tax and no further tax on company dividends has to be paid.

The research also found that there were regional differences in ISA savings, with investors from the South West having the lowest ISA balance on average - just £9,120. As expected, savers from London enjoyed the highest average, with £11,540 in ISAs, First Direct found.

According to Andy Forbes, head of product at First Direct, people who wish to invest in in stocks and shares, particularly higher-rate tax payers, should make sure that they use their ISA allowance to take advantage of available tax savings.

Copyright © M2 Bespoke 2013

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