As the new ISA limit is set to be launched next month, new research claims Brits are paying £144million in unnecessary tax payments because of their unwillingness to use an ISA.

Unbiased.co.uk has revealed £109million is being wasted by 6.2million investors who do not use a cash ISA to shield their savings from tax, while an additional £35million is being paid out in tax by 1.7million shareholders who have not transferred their holding into an equity ISA.

The professional advice website’s findings also show that of the 6.2million savers using a savings or deposit account instead of a cash ISA, nearly 75 per cent of those have added to their accounts during the financial year.

With the new ISA allowance launching on October 6, allowing over 50s to invest up to £10,200 in a stocks and shares ISA and £5,100 in a cash ISA, Unbiased.co.uk is predicting more money to be wasted in tax payments.

Explaining the benefits of holding an ISA, David Elms, chief executive of Unbiased.co.uk, said: “As savings returns continue to dwindle in this low interest environment, it is more important than ever for consumers to be astute when it comes to managing their savings – and make sure they are not paying unnecessary money to the taxman.

“Savers can avoid this pitfall by making sure their savings are kept in a tax efficient vehicle such as an ISA. Consumers should make sure they are using as much of their tax efficient ISA allowance as possible, in order to avoid unnecessary tax payments and get the best return on their cash.”

Mr Elms believes savers should consult an independent financial adviser (IFA) to ensure they are managing their finances “as tax efficiently as possible”.

“Only an IFA can advise you on how best to manage your savings, investments and retirement funding and avoid tax wastage,” he added.

From April next year, all savers can benefit from the new ISA allowances from participating banks and building societies.

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© Fair Investment Company Ltd