Savers are 'handing an unnecessary gift to the taxman'

Nine out of ten people in the UK are saving but many are giving an unnecessary gift to the taxman, according to Fidelity Investment Managers.

New research shows that most people are not maximising their returns by waiting until the end of the tax year to invest in ISAs and therefore missing out on allowing their money to grow thanks to some of the best savings rates.

In October 2009 the ISA allowance was increased for the over 50s which resulted in a significant increase in investment but research shows that only 3 per cent of people will be buying their ISA in October this year.

Tom Stevenson, investment director at Fidelity Investment Managers, said: "We would encourage those people that habitually leave it to the end of the tax year to remember the difference that investing earlier can make, it gives your money more time to grow in the market over the long run."

He added that it was very disappointing that people do not appear to be taking advantage of the savings interest rates offered by the ISA this year.

Meanwhile, fears are growing that the government may decrease the ISA limit, as it was estimated that ISA cost the Treasury around £2.2 billion in lost taxes. 

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2010-10-05 12:36:22 © Moneyextra.com