Alliance & Leicester: ISAs are too complicated

Alliance & Leicester: ISAs are too complicated

Many people in the UK find individual savings accounts (ISAs) confusing, according to new research by Alliance & Leicester.

The building society found that 71% of Brits did not know that the current Cash ISA allowance is £3,600.

One in five (19%) of those questioned believed that the allowance was still £3,000.

Nearly half of those polled (43%) didn’t have any money in a cash ISA, whilst just one in five (22%) had money in a Stocks and Shares ISA.

The most confusion about ISAs was caused by the fact that money withdrawn from an ISA loses its tax benefit forever and cannot be replaced.

Half (53%) of Cash ISA holders said they’d like to be able to withdraw and replace money, up to the £3,600 limit, without losing their tax free benefits.

The results of the survey come despite improvements that have been made to simplify ISAs since their launch ten years ago.

Reza Attar-Zadeh, A&L’s director of savings and investments, said: “While take up of ISAs has been positive over the last decade, there are still a lot of people not using them and many continue to find ISA rules confusing.

“In order to encourage people to save tax efficiently, the message is clear, ISAs must be simple and flexible.”

Recent research by the Post Office found that people in the UK are missing out on a combined total of £1.33 billion tax free interest by not taking full advantage of their Cash ISA allowance.

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