ISA savers have criticised the current ISA limits, deeming them ‘unfair’ as they ‘penalise’ people who want a low-risk investment, according to research by Clydesdale and Yorkshire Banks.

At present, the annual ISA limit for savers is £7,200 with cash investments limited at £3,600, while over 50s can invest up to £10,200 with £5,100 held in cash. However, 84 per cent of savers claim the limits are not fair on people who do not want to risk the volatility of the stock market and prefer to invest solely in cash.

Cash ISAs appear three times more popular than stocks and shares ISAs with 31 per cent of savers preferring to invest in cash compared to eight per cent who said stocks and shares.

As a result, three quarters of savers are now calling for the maximum limit to apply to cash investments as well so they can make full use of their tax-free ISA allowance.

Commenting, Steve Reid, retail director at Clydesdale Bank said: “The lack of flexibility in ISA rules means that a significant number of taxpayers cannot make full use of the ISA allowance. Savers and investors clearly feel that they should have the right to make full use of the allowance within their risk profile.”

From 6 April, the current over 50s ISA allowance will be available to all other eligible savers, but Mr Reid does not believe this will appease savers.

“A higher allowance in the new tax year is of little benefit to those who are risk averse if they can only make use of half of it.  If we want people to save more we have to support those for whom the stock market represents too much risk,” he said.

Last month Clydesdale and Yorkshire revealed that on average more than £1billion of tax free interest has been wasted each year by people failing to use their full ISA allowance and the two banks are predicting that this figure could increase to £1.7billion in light of the upcoming increase to the ISA limits.

Acknowledging the dissatisfaction amongst many savers, Mr Reid added: “Clearly there are places for cash and stock market investments, but to truly encourage saving, consumers should have the choice to invest their full allowance in cash.”

© Fair Investment Company Ltd