A year on from the launch of the Personal Savings Allowance (PSA) only one in six adults have started to save or increased the amount they save, new research* for the Nottingham Building Society (The Nottingham) shows.
Its study found that only 17% of adults have taken advantage of the new rules with around two-fifths of them first-time savers. One age group where the PSA has proved to be popular is with 18-24 year olds – with more than a third (40%) of them starting or increasing saving thanks to the new rules.
But more than half (52%) of adults are still not aware of the allowance enabling basic-rate taxpayers to earn £1,000 in interest tax-free a year and higher-rate taxpayers to earn £500 a year which came into effect from April 2016. The survey found that the over-55s were the group most aware of the new benefits – around 58%, with the figure rising to 62% of those over 65.
Savings levels rose among those aware of the Personal Savings Allowance. More than a third of them are saving more with average monthly savings hitting around £85 or more than £1,000-a-year. Around one in eight said they are saving more than £200 a month extra as a result. Half of those between 18 and 24 said they were saving up to £50 a month, 30% said they saved between £50 and £100 and 10% said they save between £150 and £200 a month.
Jonathan Cartlidge, Senior Product Manager at the Nottingham Building Society (The Nottingham), said: “This survey reflects the difficulties that many people face in making a regular commitment to save and it is heartening to see young people really making an effort. We know the sooner you start to save, the better you will prepare for life’s milestones.