Impressive ISA figures?
November 2nd, 2007
I recently read an article on the BBC website which had the headline ‘ISAs total value jumps to £208bn‘. This figure may sound impressive, but in reality it’s not.
Currently there are 17 million people in the UK with an ISA account and of those 13.6million added to them in the last year. Again this all sounds healthy for a savings and investments product, so why am I so downbeat?
For me, it’s more a case of what could have been rather than what is. If you put these figures in the context of the UK population you can see why I am not overly enthusiastic about them.
Last year, a study found that 60% of the UK population still does not hold an ISA, and these people are failing to make use of their allowance every year. Taking this into account the figure of £208bn could be 60% higher – and that would be impressive.
So why are we not taking advantage of such a good product? There is no one answer, but what is clear is that without an ISA, be it cash or equity, you could be paying unnecessary tax on your savings and investments.
The main benefit of an ISA is that it’s tax efficient – you pay no capital gains tax when you take your money out and no tax is paid on the income you receive from your ISA savings and investments.
Another benefit is that if you have to fill in a self-assessment form, you do not need to include any details on the ISA.
It always amazes me when I see people with thousands of pounds in low interest, low return savings accounts and equity products, seeing their returns diminished by tax payments and taking no notice of their ISA allowances.
I guess my point here is that there is no good reason why, if you have the money, you are not using part, if not all, of your ISA allowance every year.
To find out more about ISAs and in particular, investing in equity ISAs call a member of the Torquil Clark Investments Team on 0800 294 7221, or get in touch with us online.
Author: Philippa Gee
November 2nd, 2007
Category: Investments.
