Over a third (39%) of people made use of their tax-free ISA allowance in the last tax year, easyMoney has revealed.

After conducting a survey of 1,079 members of the UK population, three in five (61%) people stated that they put no money into an ISA in the past tax year, with just under a quarter (23%) investing some money into an ISA in the same period.

The survey found that just 16% of those surveyed invested the maximum amount of £20,000 in the last tax year. Of those who did not invest the maximum amount, the majority said that it was because they lack the required disposable income to do so.

easyMoney said this is a “sure sign” that the ongoing cost of living crisis is having an impact on people’s ability to save for the future.

Chief executive officer at easyMoney, Jason Ferrando, said: "ISA investment is a great way for people with all sorts of levels of wealth to make their money work for them, but for most people nowadays, disposable income is really hard to come by. And at times like this, investing and saving is very much a luxury, so it’s little surprise to see many people tuned out of the ISA investment world. "

Looking ahead, three quarters (75%) of people said they have no intention of investing the maximum amount into an ISA in the current financial year, with 83% saying that this is down to a lack of disposable income.

However, there is now the possibility of investing more following the introduction of the recently announced British ISA, which gives investors an additional £5,000 tax-free allowance, on top of their existing £20,000, when investing in British entities.

easyMoney found that when presented with the subject of the British ISA, 57% said they were unaware of its existence and therefore didn’t know about the additional allowance. Even when made aware of the British ISA, 81% said they have no plans to invest in the new scheme.

"The launch of the British ISA demonstrated just how far the profile of ISA investment has come in a few short years and not only is the additional tax-free allowance great news for investors, but further diversification of the ISA offering is also a positive," added Ferrando.

"However, it seems as though the uptake will be initially slim, with the majority of savers opting not to utilise this product when it is launched."

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