Brits Miss out on £242 Million of Tax-Free Interest

London, UK (PRWEB UK) 14 May 2012

British savers could be missing out on an estimated £242 million1 worth of tax-free interest as a result of cash sitting in current accounts at the end of the month, according to new research2 from Santander Savings.

According to the findings, in a normal month, the average cash ISA holder has £498 left over in their current account as payday arrives. Despite this, only 17 per cent will take full advantage of this year’s £5,340 tax-free cash ISA allowance.

With the majority (71 per cent) of ISA savers reaching payday with money still sat in their current account, Santander is urging people to use this leftover cash wisely and take advantage of tax-free interest where possible. If they have already used their full ISA allowance, they can still make their cash work harder via Santander’s new 123 Current Account, which pays up to 3 per cent interest on up to £20,000 3.

Santander’s research highlights that only 17 per cent of ISA savers know how much they can deposit in a cash ISA during the current tax year. Around a quarter (26 per cent) say they have absolutely no idea and around 59 per cent of ISA savers believe they know, but are actually mistaken. Indeed, 12 per cent of ISA savers surveyed think they cannot deposit more than £3,500, which is over a third less than the actual cash ISA allowance.

Matt Hall, Head of Savings, Santander, commented: “Maximising the return on spare cash is important and taking advantage of tax-free interest via a cash ISA is a great place to start. With only a few days to go to the end of the tax year, I’d urge savers to make use of their ISA allowance immediately as any unused allowance is lost forever. Santander’s ISA range has something for everyone and offers great returns.”

The information contained in our press releases is intended solely for journalists and should not be used by consumers to make financial decisions.

Notes to Editors

1.    Santander took an average of interest rates offered on the top 10 cash ISA accounts according to Moneyfacts.co.uk. on 10th February 2012; this was 2.96%.

822 respondents out of 2010 (41%) said they had money left over before payday. This represents around 20,441,000 people based on a total population of 49, 924,000.

The average amount leftover in current accounts was £498. If those with leftover cash deposited £400 each (allowing £98 surplus for unexpected outgoings and expenses) into an average cash ISA account for 12 months, they would earn £242 million of tax-free interest collectively.

2.    Research conducted by Opinium Research amongst 2010 UK adults, 27th – 30th January 2012.

3.    New 123 Current Account pays in-credit interest as below:

         1% AER on the entire balance, once the customer’s balance is £1,000 or over

         2% AER on the entire balance, once the customer’s balance is £2,000 or over

         3% AER on the entire balance, once the customer’s balance is £3,000 or over (up to £20,000)

         No interest paid on balances below £1,000.

Dates for opening an ISA with Santander

The Santander website is now closed to ISA applications for the current tax year. From 2 April, online applications will be accepted for next tax year ISAs only, with the accounts being opened from 6 April 2012.

From 2 April, applications for an ISA over the telephone for the current (2011/12) tax year will only be taken for customers who have money in another Santander account that can be used to fund the newly opened ISA or if they simply wish to transfer in rather than subscribe with the current year (2011/12) allowance. Customers who want to pay in during the current tax year from a non-Santander account will need to visit a Santander branch from 2 April 2012, where applications will be taken until 5 April 2012 subject to the availability of appointments.

As with all banks, some customers may need to provide additional identification documents before an account is opened, in order to comply with regulations, which makes it even more important to ensure that ISA applications for this year are made as early as possible.

About Us

Santander UK plc is a full-service retail and commercial bank providing services to 25 million customers, with more than 1,400 branches and around 4,200 cash machines. It is a wholly owned subsidiary of Banco Santander. Santander UK plc is autonomous from its parent in terms of capital and liquidity, raising its own funds to run its business. Over 85% of the assets on Santander UK plc’s balance sheet are UK based and it is subject to full supervision of the Financial Services Authority (FSA) in the UK. Santander UK plc customers are protected by the Financial Services Compensation Scheme (FSCS) in the UK.

Sovereign exposures to Europe (excluding UK) as at September 2011 are not significant at less than 1% of total assets and primarily relate to Swiss government. Total exposure to periphery countries is c. 0.5% of total assets.

Banco Santander is a retail and commercial bank, based in Spain, with a presence in 10 main markets. Santander is the largest bank in the euro zone and tenth in the world by market capitalization. Founded in 1857, Santander had EUR 1,374 billion in managed funds, more than 100 million customers, 14,679 branches – more than any other international bank – and 190,000 employees at the close of June 2011. It is the largest financial group in Spain and Latin America. Furthermore, it has significant positions in the United Kingdom, Portugal, Germany, Poland and the U.S. northeast. Santander Consumer Finance operates in the Group’s core markets as well as in the Nordic region. In the first half of 2011, Grupo Santander registered €3,501 million in net attributable profit.

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