Savers are potentially missing out due to not understanding the range of savings options available to them, particularly the personal savings allowance (PSA) and ISA accounts, according to the Skipton Building Society (SBS).
On a survey of 2,000 people, 47% said they were confused by the rules regarding to ISA accounts, while 36% didn’t know what the new PSA was.
SBS also found:
10% said they don’t understand the different types of saving products
22% didn’t know how ISAs differ from saving accounts
10% unaware of what ISA and PSA acronyms stand for.
Changes to PSA were introduced from 6 April 2016, allowing basic rate taxpayers to earn up to £1,000 in savings income tax-free.
For higher rate taxpayers the tax-free PSA is £500.
Tax-free interest from ISAs doesn’t apply towards your new PSA.
Kris Brewster, head of products at SBS, said:
“The savings landscape is becoming too complicated, especially with multiple types of ISA products.
“We’d encourage the government to think about really helping savers by ending tax on all savings interest, and in doing so, abolishing the need for ISAs, putting an end to this confusion and creating a nation of lifetime savers.”