Official figures from HMRC show that people are saving more in tax-free ISAs than ever before.
In the 2010-11 financial year there were 15.3 million active ISA accounts, the most since the introduction of individual savings accounts in 1998. That means 391,000 new accounts were opened last year which seems to dispel claims that rising costs would stop people saving.
The average deposited in a cash ISA last year was £3,190, whilst savers put an average £4,627 into a stocks-and-shares equivalent. The interest from an ISA account is tax free and the investment is sheltered from the taxman.
Matt Griffith, a spokesman for PricedOut, has suggested that first time buyers should take advantage of ISAs to help them save for a deposit. As from the start of this financial year, savers can have up to £10,680 tax free in these savings accounts.
Griffith went on to explain that using chunks of money such as ISA cash is probably the only way a lot of UK consumers and freelancers will be able to afford a deposit in the next few years as banks and building societies continue to pay meagre rates of interest on ordinary savings accounts.
He also said first time buyers should ask their MPS why the UK has not provided cheaper housing for their generation. The Countryside Alliance published results of a study last week that showed that British local councils failed to meet their affordable housing targets by more than 76% last year.
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Image: Look after the pennies and the pounds will look after themselves by Mukumbura
