Millions of UK savers lost out on a full year's interest in the 2008/09 tax year by only paying into an ISA at the last minute, finds Abbey.

While the end of the tax year often sees people rushing to sort out their financial affairs, savers are being urged to start the new tax year as they mean to go on and get the most from their tax-free savings by snapping up a great cash ISA rate now.  

Research from Abbey Savings reveals that, while the average amount saved in cash ISAs for the tax year 2008/09 was £2,082, only a third of savers were savvy enough to have earned the maximum tax-free return by paying in a lump sum at the start of the last tax year.

According to Abbey, one in seven ISA savers are celebrating ten years of ISA saving, having opened their first ISA account back in 1999.  But over a quarter of savers are still undecided as to whether to start a cash ISA for this tax year.

Reza Attar-Zadeh, director of savings and investments at Abbey, says, ‘In the current climate, every penny counts, so making your savings work hard for you all year round is crucial. A cash ISA is a great way to make sure the taxman doesn't get his hands on the interest you get on your hard-earned money. The new tax year is here and the sooner an ISA is funded, the greater the return on the money saved.

‘Abbey offers a range of cash ISAs, including our Reward ISA with a tax-free interest rate of 3.50 per cent AER. A lower-rate taxpayer would have to find a standard savings account paying 4.37 per cent to earn the same annual return. Savers can open a cash ISA with as little as £1 so there's no excuse to delay opening a tax-free home for your savings.’

Further reading:

Financial planning with ISAs