Savers confused by tax relief system

People looking for the best savings interest rates are still confused about the tax breaks available to them, according to new research from Nationwide Building Society.

The society's latest survey showed that many Brits are failing to take advantage of their ISA tax relief as they don't understand the current system.

Almost all respondents 95 per cent failed to correctly identify the full ISA allowance and one in five mistakenly stated their cash ISA allowance for the current tax year.

The survey also revealed that more than a quarter of respondents do not think there is an ISA limit and 39 per cent believe they pay tax on their savings held in ISAs.

Robin Bailey, Nationwide's director for savings and investments, said: "Our research shows that there is still a great deal of confusion and misunderstanding around ISAs, and that people are still not taking full advantage of the tax breaks that they offer."

He added that a better understanding of the ISA system would lead to consumers making the most of the best savings rates available.

Recent figures from the Building Societies Association indicated that the balance of savings held by mutuals fell by £424 million in January 2011.
 

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2011-03-07 13:14:59 © Moneyextra.com