Individual savings accounts are becoming less popular among the British public, according to official figures published amid widespread criticism of the government’s help-to-buy Isa.
About 12.7m Isas were taken out by adults in 2015-16, said HM Revenue & Customs, down from 13m the year before. The number of new Isa openings peaked at about 15m in 2010-11.
But the amount saved into new Isas rose by £1bn to a record high of £80bn. The typical saver put £6,338 into an Isa, up 5% on the year before.
The Treasury and high street banks are facing possible legal action under consumer rights law that they misrepresented the Help to Buy ISA scheme, it has been reported.
Millions of adults under 40 will be able to use a new Individual Savings Account (Isa) to buy a home or a pension, the chancellor has announced.
The Lifetime Isa will be launched in April 2017, and savers will receive a 25% bonus from the government.
They will be able to put in up to £4,000 a year, with the annual bonus of up to £1,000 paid until the age of 50.
The UK Government’s new Help to Buy ISAs savings scheme for first time buyers is proving popular with a quarter of a million opening one of the financial products since it was launched in December 2015.
Some 250,000 first time buyers, more than half of whom are aged 30 and under, have opened a Help to Buy ISA which helps them to save for a deposit for their first home.
The first home buyers have also claimed their Help to Buy government bonus this week, which means the new Help to Buy ISA is already helping first time buyers onto the housing ladder.
Help-to-buy Isas have been opened at a rate of one every 30 seconds since the initiative launched on 1 December, George Osborne has announced.
The scheme, unveiled in the budget last March, gives those saving for their first home £50 for every £200 they put in the tax-free account to save for a deposit. Aspiring homebuyers can save up to £12,000 in the new Isas, entitling them to up to £3,000 of government money towards their deposit.
The Treasury said 250,000 people had opened a help-to-buy Isa account since the launch, equating to roughly 3,000 a day or one every 30 seconds. Data provided by a sample of banks offering the accounts suggest that 75% of the new savers are aged 30 and under.
From 1 December first-time buyers will be able to save in a Help to Buy Individual Savings Account (HTB Isa) and the government will add money to it.
As with a traditional cash Isa, the interest you earn will be free of both income and capital gains tax.
Interest of up to 4% will be paid on new Help to Buy Isas - accounts aimed at helping potential property buyers save for a deposit.
Banks and building societies are unveiling their deals as part of the government-backed scheme which begins on Tuesday.
The UK’s new Help to Buy ISAs are a step in the right direction, but much more must be done to help people renting taking their first step on the property ladder, it is claimed.
According to Kevin White, head of financial planning at independent financial advisory group deVere, it is effectively free cash from the government and anyone who wants to buy their first home should take advantage.
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