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31 Jul 2013

HMRC Reports Increase In Isa Savings

Many Britons are still looking for tax-free saving options, as more and more consumers have been interested in saving in such accounts, according to new research from HM Revenue and Customs (HMRC).

During 2012/2013, a total of 14,559,000 individual savings accounts (Isas) existed, compared to 14,180,000 in the previous year. The amount of cash saved into these also increased from £53.53 billion during 2011/2012 to £57.29 billion this year, This Is Money website informed.

At the beginning of each financial year in April, savers are given the chance to start afresh and have a new tax-free limit. In 2013, Britons can save up to £11,520 in an Isa but just half of this sum can be saved into a cash savings account without losing the tax break.

This may be one of the reasons why more people prefer to save into stocks and shares Isas, rather than in cash. Figures from HMRC showed that while the average saver put £3,501 in cash Isas in 2012/2013, stock and shares Isas saw average contributions of £5,696.

Favouring shares over cash has been a trend over the past couple of years. In 2010/2011, 42% more was saved into shares than cash, and in 2011/2012 the gap rose to 63%. This can be attributed to the fact that cash savings generally yield lower returns. It would be interesting to see whether this gap will further increase in the course of this financial year, This Is Money website commented.

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