Thousands of savers who are not using their cash ISA allowance are missing out on interest rates that are up to six times higher than the base rate, Barclays has claimed.

According to the high street bank, 56 per cent of Brits will not open an ISA in the current tax year, losing out on the tax benefits that it provides, and instead leave more than £4,000 sitting in taxable savings and current accounts.

Meanwhile, a large proportion of Brits – 71 per cent – do not think they have sufficient funds to invest, despite having thousands of pounds sitting in a savings account, with 46 per cent of Brits admitting that they have never invested in an ISA.

Looking at how people view ISAs, Barclays has found that more than one in ten Brits do not understanding what an ISA is, with a further 11 per cent under the impression that they would not have instant access to their money if they used a cash ISA.

Commenting, Andy Gray, head of savings for Barclays said: “It’s concerning to see that so many people don’t understand ISAs and will lose out on their tax free allowance.”

More encouraging findings from Barclays has revealed that of those who are intending to use their ISA allowance in the current tax year, a third have already done so, and a further seven per cent will open one before the April 5th deadline.

However, the average amount paid into an ISA currently stands at around £2,500, which means savers are generally not using £1,100 of their cash ISA allowance, and with the limit set to increase to £5,100 from April 6th, savers could risk wasting even more of their tax free allowance.

Reassuring savers that many ISAs are “as flexible” as an instant access savings account, Mr Gray added: “We would strongly recommend that they make the most of their ISA tax free allowance as the end of the tax year approaches.”

© Fair Investment Company Ltd