1 in 4 unaware of Personal Savings Allowance says Leeds Building Society

08 Jan 2019 More than half of savers (53%) still intend to rely on ISAs to protect interest on their nest egg from the tax man, according to new research by Leeds Building Society.

The national survey also found most people (66%) chose an ISA because they knew their interest would be tax-free^†.

The Society has continued to see strong demand for its ISAs, particularly fixed rate products, despite a marked decline in the tax-free savings market following the introduction of the Personal Savings Allowance (PSA).

Since the PSA came into force in April 2016 the first £1,000 in savings interest earned by basic rate taxpayers is tax-free (£500 for higher rate taxpayers), a benefit which applies to the majority of UK savers.

However, one in four of those surveyed (24%) was unaware of the PSA.

“We carried out this national research to find out what savers thought about tax-free saving and better understand what type of products they were seeking,” said Matt Bartle, Leeds Building Society’s Director of Products.

“We believe ISAs are still important to tax-efficient saving in the longer term – consistent saving in tax-free products can build up a substantial nest egg over time and all the interest on that investment is protected from the taxman.

“While the PSA benefits the majority of savers, it was surprising a significant number of people were either unaware of it or unsure of how it affected them.

“Successive Governments have implemented different measures to incentivise saving – the fact that savings accounts with tax-free status have been around for nearly 30 years acknowledges the importance of this type of product and its value to consumers.”

The Society has refreshed its ISA range for the New Year and offers a choice of variable and fixed rate products, available across different channels including branch and online.

Highlights include:

·         1.80% Two Year Fixed Rate ISA, which is market-leading on the high street

·         1.38% Limited Issue Online Access ISA

The maximum investment for the current tax year (2018/2019) is £20,000, less any amount invested in a Stocks and Shares ISA in the same tax year.