Britons need to take steps to make sure that they are saving their money in a cost-effective manner, it has been claimed.
According to Nationwide, a failure to invest the full amount into individual saving accounts (Isas) ahead of the end of the tax year will see consumers pay millions of pounds in unnecessary tax repayments. It was suggested that at present only about a third of adults have an Isa, with many of these people failing to make the most of the tax-free savings vehicle each year.
Research from the financial services firm also revealed that during the present tax year maxi Isa holders will leave a savings deficit of some 6 billion pounds, those with mini stocks and shares products are set to leave investments short by 5.5 billion pounds. However, financial difficulties could be even more pronounced for consumers in possession of a mini cash Isa. It was suggested that these people will have around 9 billion pounds uninvested.
Nationwide claimed that if this total amount of 20.5 billion pounds was put into non-Isa savings, paying 5.25 per cent in interest, consumers would end up shelling out 225 pounds million in unneeded tax repayments. Meanwhile, it was pointed out that those who do not have an Isa also put their money into tax-charging savings then they would end up handing out 1 billion pounds to tax officials.
Following on from a savings shortfall consumers may discover that they struggle to meet financial commitments in later life; such areas may include loans and credit card bills.
Matthew Carter, savings director at Nationwide, stated: "With only a month remaining in the current tax year, people should make sure they are taking advantage of the tax-efficient savings on offer by using all of this year's Isa allowance. Any part of their allowance remaining unused by April 5th will be lost forever. Millions of people fail to do this each year and are simply allowing their hard-earned money to line the chancellor's coffers."
And with limits of how much can be saved into Isas due to be raised from next month, Nationwide pointed out the need for people to put as much as possible into such products and "enjoy the tax-efficient benefits of this savings vehicle".
From April 6th, consumers will be able to invest 3,600 pounds into a cash-based Isa and up to 7,200 pounds in stocks and shares product. At present a total of 7,000 pounds can be placed into one maxi Isa or two mini products. Only 3,000 pounds is currently allowed to be put invested via cash.
Those people worried about their capacity to save money may wish to apply for a loan. In taking out a cheap loan for the purposes of debt consolidation, consumers may find that they can meet numerous demands on their findings at once. As such, this may leave them with more disposable income at the end of each month, money which could then be put into savings vehicles.
A consolidation loan could be of particular help to people worrying about their mortgage repayments. David Kuo, head of personal finance at Fool, recently claimed that homeowners concerned about increasing costs as the price of property continues to fall "should take action now" and look to switch to a more competitive repayment method.
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