Many fail to take advantage of Isas

A new report from Alliance & Leicester (LSE: AL) says that 20 percent of British adults consider the system of Individual Savings Accounts (Isas) to be “too complicated”. The accounts were first offered to UK savers in 1999, but many still don’t understand how they work or what tax advantages they can gain from having an Isa, according to the report. Only 40 percent of those surveyed, in fact, think that tax advantages should be taken into consideration when they open a savings account. Up to 14 percent claim that they don’t even know what an Isa is.

Besides those who don’t know what an Isa is or what the advantages of having one are, the report found that a number of misconceptions keep people from opening the accounts. Nearly 17 percent, one-sixth of those surveyed, said they did not have enough money to open an Isa, despite the fact that it takes just £1 to open a mini cash Isa. Others worried that they would not have instant access to the money in such an account, even though many of the accounts do offer this feature.

A separate report, from Nationwide, found that 60 percent of adults in the UK have not opened an Isa. Neither, according to Alliance & Leicester manager for savings Ross Dalzell, have younger savers, even though individuals as young as 16 are eligible to open the accounts.

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