Savers pay out 'extra £13b' in tax

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Savers pay out 'extra £13b' in tax

Mon 22nd Feb 2010

Savers who do not make full use of their Isa allowance are handing over a combined £13 billion in tax each year, according to Clydesdale and Yorkshire Banks.

It is estimated that since the tax-free savings scheme was introduced in 1999, savers have only put one sixth of their potential limit into their accounts, meaning billions have been paid in tax unnecessarily in the past decade.

As taxpayers will hand over either 20 per cent or 40 per cent of their earnings to the taxman each year, the tax benefit on Isa allowances is worth around £15.25 billion across the population.

Steve Reid, retail director for Clydesdale Bank, said: "With the new, higher allowances from April, the advantages of Isas are even greater. Savers really should not miss out on these allowances."

However, many savers have been taking advantage of the bonuses that Isas offer, with £40 billion being invested into the products since they were created a decade ago.

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