This tax year, 73 per cent of Brits who do not already have an ISA will be letting their allowance go to waste, a study by the Co-operative has found.

The research shows that the number of people shunning their ISA allowance is up 13 per cent on the last tax year, illustrating that people have less money to put away into savings.

And, reflecting people’s uncertainty about the stock market following its tumultuous year, 84 per cent of those who intend to invest in an ISA by the ISA deadline on April 5 are opting for Cash ISAs rather than Stocks and Shares ISAs.

Despite the historically low savings rates being offered at the moment, investors are still going for the cash-based accounts in search of security, rather than those that track the stock market and offer potentially higher returns.

“These figures are concerning.” said Zack Hocking, head of investments at the Co-operative Bank. “Not only do they confirm that many people intend to let their ISA allowance fall by the wayside, reluctance exists to invest in the stock market at a point when many industry experts are saying it could be a great time for investors with a longer-term horizon.

“Once the deadline passes, that’s it, the allowance is lost forever and people should not be put off saving despite uncertainty in the economy or the stock markets.” he said. “If in doubt they should consider taking financial advice from an expert to ensure they fully understand the merits of continuing to save.”

This year has obviously had a profound effect on British investors, as 62 per cent said that their choice of provider to invest their ISA allowance with will be heavily influenced by the events of the financial crisis and which provider they feel they can trust.

“Investors are now clearly reluctant to put their money into organisations that have previously been reckless with their savings. They want to deal with providers that they can trust to be responsible with their money.” Mr Hocking added.

ISAs are Individual Savings Accounts into which savers can deposit up to £7,200 a year, and pay no tax on any returns. £3,600 of this allowance can be paid into a Cash ISA, and the remainder into a Stocks and Shares ISA, or the entire amount can be invested in stocks and shares.

© Fair Investment Company Ltd