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22 Sep 2012

Millions Of Britons Plan To Use Cash ISAs This Year

About 17 million adults in the UK intend to put their savings into a cash Individual Savings Account (ISA) by the end of the tax year to April 2013, Moneyfacts.co.uk reported last week, citing a survey from Santander.

According to the report, interest in tax-free savings accounts is strongest among people aged between 18 and 34, with 40% of this age group planning to pay into a cash ISA this year.

Regionally, Londoners are the most interested in ISAs, with 45% of the capital's citizens planning to deposit into a cash ISA, the report showed.

The findings come after the initial enthusiasm over ISA season has waned. However, Andy Smith of Santander noted that people will benefit from putting their savings into a cash ISA as early as possible. Saving in a cash ISA now will still provide almost a full year of tax-free interest, Smith said, with some very good rates of return available in the market.

ISAs are tax exempt accounts, with holders paying no tax on the income they receive in the form of interest and dividends and any capital growth being exempt from capital gains tax. There are two types of ISA - cash ISA and stocks and shares ISA. For the tax year starting from 6 April 2012, adults can deposit £11,280 into a combined stocks and shares/cash ISA, with the cash ISA limit set at £5,640. Savings in a child Junior ISA have been limited at £3,600.

ISAs replaced earlier Personal Equity Plans (PEPs) and Tax-Exempt Special Savings Accounts (TESSAs) which were available in the UK before 6 April 1999.

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