The New Isa launches on 1 July, with an investment limit of £15,000, but research has shown that the majority of UK savers have little or no understanding of the opportunity.
Despite being just one week away, a survey from TD Direct Investing revealed that 77 per cent of the UK is unaware of the new allowance. In a survey of 2,244 adults this month, 63 per cent said they are not planning to use their increased tax wrapper allowance.
Stuart Welch, chief executive at TD Direct Investing, said: “The lack of information on the new process from the government has led to serious confusion amongst investors and savers on how this will work.
“It is truly a shame because people should be encouraged to make the most of the tax efficient wrappers, particularly as we emerge from a five year austerity drive – and people start to think more about planning for their future.”
The findings were backed up by MoneySuperMarket’s findings, which showed that 24 per cent of those who are aware of Nisas still find the rules unclear. Just over a third of the 2,004 people surveyed online this month said they are likely to use a Nisa as a result of the changes, while 30 per cent state they are unlikely to.
Nisa appetite varies amongst certain age groups, with 45 per cent of 18 to 34 year olds likely to take advantage of the tax-free savings rules and a further third of those aged over 55 claim they are likely to save into a Nisa. There are also regional differences, with 50 per cent of Londoners, 38 per cent of those living in the South West and 37 per cent in Yorkshire and the Humber are likely to invest next week.
The New Isa rules increases the annual limit by almost three times as much as the current cash Isa limit and almost a third more than the stocks and shares limit.
“However, with so many people unaware of these rules, more needs to be done to ensure that people will actually reap the rewards”, pointed out Kevin Mountford, head of banking at MoneySuperMarket.
It will also be the first time savers will be able to match those investing in stocks and shares Isas, which currently benefit from the full annual Isa allowance.
Research by Standard Life found that 28 per cent of British adults who do not actively save into a stocks and shares Isa would like to have enough savings in the bank to cover their rent or mortgage for at least three months before committing to investing in a stocks and shares Isa.
The YouGov poll found that 27 per cent who do not actively save in a stocks and shares Isa said they would not consider investing at all, because the stocks markets are too risky.
Julie Hutchison, family finance expert at Standard Life, said: “Savers often seem to be under the impression that cash is king, but with interest on cash savings still relatively low compared to inflation, we would always encourage people to make themselves fully aware of the greater potential offered by stocks and shares investment.”
Research from HSBC showed that cash Isas are far more popular than stocks and shares Isas.
