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ISA Inertia? You’re not alone

  • 39 per cent of people surveyed do not currently have any type of ISA, and have no intention of opening one before the April 5th deadline
  • 89 per cent of people don’t know the annual ISA allowance for the 2017/18 tax year
  • 64 per cent are concerned about the impact of inflation on their savings, but only 17 per cent have a strategy in place to do something about it

ISAs have been around since 1999, and despite increasing levels of awareness and understanding, particularly for cash ISAs, there are still numerous reasons why millions of savers are failing to take advantage of this valuable tax-break, according to independent research commissioned by Barclays1. Despite tax year end looming on April 5th, 39 per cent of people surveyed do not currently have any type of ISA, and have no intention of opening one before the deadline.

 

According to the research, of the 43 per cent of people who don’t currently have or intend to open a cash ISA, four in 10 (41 per cent) said that it was because they didn’t have enough disposable income to consider opening one. A fifth (17 per cent) said they had other financial commitments, and one in 10 said they hadn’t opened one because they believed they wouldn’t be able to access to their savings when they needed them, unaware that some ISAs do allow you the flexibility to dip into your ISA savings, and then to top it back up in the same tax year.

 

Sue Hayes, Managing Director Community and Premier Banking at Barclays, said: “In the current low interest rate environment, we appreciate that it is not always easy for people to grow their nest egg. However, at Barclays we're keen to encourage a nation of savers and investors, and to ensure that everyone is prepared for the financial impact of life’s ups and downs.

 

“The increase in the annual ISA allowance to £20,000 for the 2017/18 tax year is a great opportunity for people looking to shelter even more of their savings from tax, but with only 11 per cent correctly able to identify the increase in the allowance, that leaves a number of savers who could be putting themselves at a disadvantage. With a little research, you could uncover savings opportunities that make a real difference.”

 

Confusion is greater when it comes to investment ISAs, also known as stocks and shares ISAs. Of the 76 per cent of people who don’t currently have or intend to open an investment ISA, a third (33 per cent) don’t feel they have enough disposable income to open one, a third (34 per cent) don’t understand them, one in five (22 per cent) feel they are too risky, and one in five (19 per cent) wouldn’t know what to invest in.

 

On top of that, over a third (37 per cent) of people that don’t have an investment ISA said they didn’t feel that investment ISAs were aimed at people like them. Of those, four fifths (81 per cent) said that it was because they weren’t wealthy enough, and one in five (22 per cent) said that it was because they were the wrong age. When asked about the minimum amount they would need in order to open an investment ISA, the average response was just under £2,400, with 11 per cent saying they would require at least £5,000.

 

With UK inflation one the rise, 65 per cent of respondents claimed they were concerned about the impact inflation would have on their savings. However, only 17 per cent felt they had a strategy in place to do something about it.

 

Clare Francis, Barclays Savings and Investments Director, said: “With the Bank of England base rate at a record low, and inflation at its highest rate for more than three years, it’s more important than ever that people stay in control of their money and plan ahead. One strategy to combat inflation is to consider whether an investment ISA could be right for you, as stock market investments tend to outperform cash savings over the longer term. You’d be surprised how easy it is to open an investment ISA, and even if you can only invest a small amount each month, you can still build up a sizeable, balanced portfolio over time, the returns on which are shielded from tax.

 

“However, there are no guarantees because stock market-linked investments can fall as well as rise, so it’s important to first make sure you’re comfortable with the risks. Barclays customers can now open an investment ISA through online banking, as part of the bank’s new direct investing service.”

Notes to editors

1 An independent survey of 2,000 adults from within the UK was carried out by One Poll, commissioned by Barclays in March 2017

Tips and interviews available on request

Link to Barclays’ ISA range: http://www.barclays.co.uk/savings/isas

Link to Barclays’ new direct investing service: http://www.barclays.co.uk/savings/investments

About Barclays

Barclays is a transatlantic consumer, corporate and investment bank offering products and services across personal, corporate and investment banking, credit cards and wealth management, with a strong presence in our two home markets of the UK and the US.

With over 325 years of history and expertise in banking, Barclays operates in over 40 countries and employs approximately 120,000 people. Barclays moves, lends, invests and protects money for customers and clients worldwide.

For further information about Barclays, please visit our website www.home.barclays .