Research carried out by Skipton Building Society has revealed that many savers are missing out due to not understanding the rules and financial jargon that are associated with the new PSA and existing types of savings accounts.

Of the 2,000 people surveyed, almost half (47%) said they are confused by the rules associated with ISA accounts, over two fifths (44%) said they didn’t know what the maximum amount is they could put into an ISA and over a third (36%) didn’t know what the new Personal Savings Allowance (PSA) was.

The research revealed a clear lack of understanding on the savings landscape, one in five people admitted they didn’t save at all (19%), with one in ten of this group stating it is because they don’t understand enough about the different types of savings products (10%).

The research also shows that it’s not just savings rules that are confusing the nation, a fifth (22%) stated they didn’t know how ISA differed from standard savings accounts, and surprisingly one in ten (10%) said they didn’t even know what the acronyms ISA or PSA stood for.

Research released today by HSBC indicates the UK public may be missing out on financial reward by not seeking professional advice.

Of the investments made to-date in 2016, two thirds were arranged without any financial consultation (68%). Over half of respondents planning to make an investment during the remainder of the year are unlikely to seek any advice (51%) and almost a quarter (23%) of those asked felt it was too expensive.

With a fifth (18%) of customers we spoke to during our research telling us that they are looking to make an investment during 2016, HSBC has launched Stand-alone Investment Advice following a successful trial period. The service is designed to provide financial advice for customers looking to invest single lump sums of cash from £15k.

One in five adults in the UK (22%) has £15K or more to invest. Despite this, there is currently a gap in the UK advice market where customers who have smaller amounts of money to invest can’t access the appropriate advice. This could mean customers leave their long-term savings in cash, sitting in bank accounts as seen by almost half of the respondents (47%).

With the introduction of Stand-alone Investment Advice at a 30% discount to full financial advice, HSBC says it is providing a more affordable service to customers as and when they need it, helping them to make the most of their money.


The Personal Savings Allowance (PSA) comes into force from the start of the 2016/17 tax year and will reduce the amount of tax paid on savings interest for most people.

It is a radical new government scheme designed to encourage people to save more, it is conscious that it needs to incentivise savers at a time when interest rates are historically very low.

Up until the introduction of the PSA all bank and building society interest was paid net – i.e. after 20% has been deducted at source by your account provider (apart from ISAs).

The tax treatment of savings interest changes from 6th April 2016 when everybody will receive their interest payments gross – i.e. without any tax deductions.

The PSA applies to interest earned on all non-ISA cash savings ,current accounts and Peer to Peer lending and will allow savers to receive a generous portion of their interest totally free of tax.

As a result of this move it’s expected that around 95 per cent of savers will receive their interest tax free – a change that gives the vast majority of savers an instant boost of 20% on their savings income.

The amount of tax free interest you will be entitled to under PSA will be based on your annual taxable income as follows:

  • If you earn less than £43,000, i.e. a basic rate taxpayer, there will be no tax payable on the first £1,000 of savings interest earned each year.
  • The tax free allowance if you are the higher rate tax bracket (earning between £43,001 and £150,000) has been set at reduced limit of £500.
  • People in the 45% tax band, i.e. those with an income above £150,001 are currently not entitled to the PSA.

It’s a positive move that will see lower earners benefit from the largest allowance giving a welcome but long overdue instant boost to UK savers.

Saving for retirement to ensure a decent standard of living in later life should be one of the most important financial decisions we adopt from a relatively early age, but people are being put off because pensions have become too confusing.

While rock bottom interest rates hasn’t helped our attitude towards savings, the constant meddling with pension rules and regulations means people simply don’t understand what they should be saving or what they are entitled to when they finally give up work.

Recent research from The Open University Business School (OUBS) highlights the level of confusion particularly around the new state pension.

According to OUBS findings 60% of employees aren’t aware that people who have been contracted out may not get the full amount of the new state pension and even more worrying is that almost a quarter of working people don’t know whether they’ve ever been contracted out.

The persistent meddling with rules and regulations has created too much uncertainty amongst would be savers and is a major reason why people are not putting sufficient monies aside for their retirement.

How can people be expected to plan for the future if the goal posts are constantly being moved? – until it’s clearer who gets what and how much people should be saving then the situation will not improve.