ISA: Deadline one month away

Savers have one month to use their annual ISA allowance or lose it.

The ISA deadline this year is April 5th and Nationwide Building Society estimates £225 million could be lost to the taxman through people leaving cash in normal savings accounts where tax is payable on interest.

In the last tax year a third of UK adults had an ISA – but of these many fail to top up their accounts to the annual maximum.

The balance on the average mini cash ISA last year stood at £2,290, on a mini stocks and shares ISA it was £1,230, and for a maxi ISA the average invested was £5,000.

The mini cash ISA maximum annually investment is £3,000, for a mini stocks and shares ISA it is £4,000, and for a maxi ISA it is £7,000.

Matthew Carter, Nationwide's savings director, said: "With only a month remaining in the current tax year, people should make sure they are taking advantage of the tax-efficient savings on offer by using all of this year's ISA allowance.

"Any part of their allowance remaining unused by April 5th will be lost forever."

He added: "Millions of people fail to do this each year and are simply allowing their hard-earned money to line the chancellor's coffers."

Meanwhile Barclays Stockbrokers reports ISA sales are up 26 per cent over January and February on 2007.

Amy Nauiokas, head of Barclays Stockbrokers, said: "We are delighted to see investors actively taking their tax allowance in 2008 despite the recent volatility.

"The 26 per cent increase in new ISAs over 2007 reinforces the investor belief that investments will outperform over the medium to long term."

He added: "As always I urge investors to be early birds – the earlier investors open their ISAs the sooner they can reap the tax benefits."

Barclays Stockbrokers ten ISA tips:

• 1) Use your ISA allowance each year The amount of tax that can be saved on £7,000 grows significantly over time, in addition to the investment returns.


• 2) Consider Protected InvestmentsCertain structured products and funds offer your capital back at maturity, plus the benefit of possible additional returns.


• 3) Consider charges and fees Fees can significantly erode returns, so be aware of hidden charges included in the underlying investment product as well as the cost of the ISA wrapper.


• 4) Regularly review performance of ISA investments You can change the underlying investment within an ISA without losing the tax protection.


• 5) Don't wait until the last minute The earlier in the tax year that you invest the longer your investment benefits


• 6) Review your provider You can move an ISA from one plan manager to another without losing the tax protection. Look for a provider that allows access to investments and ask them to transfer your portfolio.


• 7) Use your cash and equity allowance If you have invested in a Cash ISA make sure that you have used the other £4,000 of your ISA allowance for an investment ISA.


• 8) ISA/PEP convergence From April 6th 2008 it is possible to merge your PEP, mini ISAs and maxi ISAs so you can reduce your costs.


• 9) Transfer from cash to equities Do you favour the potentially better returns offered by investments than cash? From April 6th it will be possible to transfer cash ISA to a stocks & shares ISA. But you must weigh up the increased risk to your investments.


• 10) Use SIPPS to complement ISAs Having made maximum use of your ISA allowance, look at holding investments in other tax efficient investment vehicles. For example, if you are saving for the long term, SIPPs can offer even better tax benefits than an ISA.