- Only 17% of adults have started saving or increased regular payments a year on from the start of the tax-free allowance, Nottingham Building Society research shows
- More than half are not aware they can earn up to £1,000 a year in interest tax-free
A year on from the launch of the Personal Savings Allowance (PSA) only one in six adults have started to save or increased the amount they save, new research* for the Nottingham Building Society (The Nottingham) shows.
Its study found that only 17% of adults have taken advantage of the new rules with around two-fifths of them first-time savers. One age group where the PSA has proved to be popular is with 18-24 year olds – with two out of five (40%) of them starting or increasing saving thanks to the new rules.
But more than half (52%) of adults are still not aware of the allowance enabling basic-rate taxpayers to earn £1,000 in interest tax-free a year and higher-rate taxpayers to earn £500 a year which came into effect from April 2016. The survey found that the over-55s were the group most aware of the new benefits – around 58%, with the figure rising to 62% of those over 65.
Savings levels rose among those aware of the Personal Savings Allowance. More than a third of them are saving more with average monthly savings hitting around £85 or more than £1,000-a-year. Around one in eight said they are saving more than £200 a month extra as a result. Half of those between 18 and 24 said they were saving up to £50 a month, 30% said they saved between £50 and £100 and 10% said they save between £150 and £200 a month.
Jonathan Cartlidge, Senior Product Manager at the Nottingham Building Society (The Nottingham), said: “This survey reflects the difficulties that many people face in making a regular commitment to save and it is heartening to see young people really making an effort. We know the sooner you start to save, the better you will prepare for life’s milestones. For example, those who have saved around £250 a month for the past five years would now have a saving pot of over £21,000.
“At The Nottingham we work hard to support our customers and members who are trying to save. Even those people who can only commit to saving a small amount each month will see their savings grow.
“Being able to earn up to £1,000 in interest tax-free is a real incentive for saving and it should encourage more people to take advantage of the wide range of accounts available in branches and online and it is particularly encouraging to see that so many 18 to 24 year olds are starting to save.
“We offer a wide range of savings accounts including easy access, cash ISAs, online accounts, children’s accounts, fixed rate, regular savings, limited access and partner accounts enabling customers to support local sports clubs like Nottingham Forest and Leicester Tigers.”
The Nottingham’s research shows around a fifth (22%) of people who are increasing the amount they save are using branch-based accounts while 47% are using online accounts.