Brits will waste more than £1.3 billion in ISA tax savings despite having access to the £15,000 tax-free super ISA allowance.
Research from Prudential and unbiased.co.uk shows that cash ISAs are the biggest area of waste, with a reported £1.2 billion of allowances left unused.
The calculation is based on an additional 55 million ISAs that could potentially be opened under the current eligibility criteria as well as the extra interest that could be generated in comparison to a standard instant access savings account.
The research also shows that UK taxpayers may be losing an additional £104 million by not using their stocks and shares ISAs properly.
Rather than taking advantage of their tax free allowances, an estimated one million UK households are attracting tax liabilities by holding eligible stocks and shares outside of an ISA.
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Les Cameron, tax specialist at Prudential said: "ISAs are generally regarded as the first step in financial planning. They're a fairly simple way to protect up to £15,000 of your savings a year from unnecessary taxation."
Another huge proportion of the waste can be attribute to the lack of use of Junior ISAs. Introduced in 2011 to replace the Child Trust Fund (CTF), there are still over seven million under 18s without any tax-free Junior ISAs in their name.
At the basic rate of tax for Junior ISAs, there could be a potential tax saving of £2.4 million and these additional accounts could generate savings of £435 million.
Prudential and unbiased.co.uk have said that savers should be reviewing their arrangements and be making as much use of their ISA allowances as they can by this year's deadline of 5th April. The current rules state that a consumer can save up to £15,000 in any combination of cash ISAs and stocks and shares ISAs.
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Chief executive of unbiased.co.uk, Karen Barrett, commented that £4.9 billion is set to be lost in overall tax inefficiencies and ISA waste will make up a significant share of this.
She also said: "Moving your money into tax-efficient ISA accounts is a simple way to make your savings work as hard as possible for you. After the £15,000 super ISA allowance was announced 59% of unbiased.co.uk consumers polled stated they planned on taking full advantage of the limit. Although you may not be able to set aside the full amount each year, making sure you are not paying unnecessary tax on your savings will go a long way."
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