ISA deadline waiting could cost £4.3bn

Leaving ISA investments to the last minute could cost £4.3 billion in lost interest for Brits, according to new research.

As the April 5th ISA deadline approaches, banks see sales of their accounts shoot up, but savers are being urged not to leave their cash aside to the last moment in the next tax year.

Abbey Savings reveals interest lost from starting a cash ISA on April 5th 2009 over the beginning of the tax year on April 6th 2008 could mean up to £360 could be lost in interest payments – based on its best product.

With 12 million ISA savers in the UK, this could add up to £4,320 million in interest.

Reza Attar-Zadeh, Abbey director of savings & investments, said: "It is important to remember that people can use their £3,600 tax-free ISA allowance at any time, not just at the tax-year end."

"Many people leave saving in a mini cash ISA to the end of tax year.

"However, people that leave saving in an ISA to the last minute face losing a significant amount of interest throughout the year. Additionally, the competitive deals that are currently available may not be available next year."

Figures from Prudential show the scale of the last minute ISA rush.

Last year, 17 per cent of all stocks and shares ISAs happened between April 1st and 5th, and 38 per cent occurred between March 1st and April 5th.

Prudential also found the Cautious Managed Sector is by far the best-selling among the 30 classified by the Investment Management Association.

Gary Shaughnessy, managing director of Prudential retail life & pensions said: "There are many options open to investors when it comes to using their ISA allowance and if they are nervous about having too much exposure to equities, they can opt for funds that invest in a more diversified range of assets including cash, bonds, property and also equities.

"This is what cautious managed funds do and this helps explain why they are so popular with investors at the moment.”