Over 50s are being reminded that it is not too late to make use of their enhanced ISA allowance and shelter an additional £3,000 from the taxman.

With the end of the current tax year just weeks away, Fidelity International is urging over 50s, who have not already done so, to take advantage of their increased ISA allowance which allows up to £10,200 to be invested in an ISA.

Fidelity claims that a 50 year old investor could increase their earnings by up to 28 per cent by the time they reach 65 through holding their money in a tax efficient ISA compared to a non-ISA investment.

According to research by the investment provider, if a 50 year old basic rate tax payer invested the maximum allowance of £10,200 each year into an ISA-wrapped UK equity fund paying 6.5 per cent per annum, before charges, this fund could total more than £312,000 when they turn 65, providing an investment return of £160,000 that is exempt from tax.

However, compared to the same amount invested in the same fund held outside an ISA, tax deductions would bring the investment return down to just over £137,499 – the equivalent of 16 per cent less than the return on an ISA.

Meanwhile, a higher rate tax payer could benefit even more, sheltering almost £35,000 from tax, meaning the ISA would return 28 per cent more over the course of 15 years.

Commenting, Tom Stevenson, investment director at Fidelity International said: “The simple fact is that, if you don’t use this allowance and choose to leave your investments or savings outside an ISA, you’re agreeing to give part of your investment return to the Government. As you can see from our figures, that could amount to throwing away a huge amount of money over the years. An ISA puts all the money back into your pocket and your pocket alone.”

© Fair Investment Company Ltd