New ISA Allowance - Cash Rich Over-50s Could Be Missing Out and Risk Giving Money To The Taxman

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Eight million people aged over 50 estimated to have £10,000+ in cash savings, but a lack of awareness may leave more than £18 billion worth of tax breaks unused, according to Fidelity International.

Despite the positive news for the 50s and over that their new ISA allowance is increasing from 6th October 2009, new research from Fidelity International reveals that some non-savvy savers* could be missing out on sheltering £18 billion in savings and/or investments from the taxman.

Despite the positive news for the 50s and over that their new ISA allowance is increasing from 6th October 2009, new research from Fidelity International reveals that some non-savvy savers* could be missing out on sheltering £18 billion in savings and/or investments from the taxman.

Fidelity has calculated that in total, all those aged over 50 could shelter an extra £63 billion from the tax man next month. Encouragingly, a nationwide online poll conducted by the company revealed that 79% of over 50s savers, with more than £10,000 in cash savings, are aware of the changes**. However only one in three (31%) of those who are aware know that they are able to invest an extra £3,000 tax-free straightaway this year. This number rises to 41% of those with cash savings worth more than £45,000, highlighting that raising awareness of the upcoming changes may encourage further ISA uptake amongst the over 50s.

Rob Fisher, Head of UK Personal Investments at Fidelity comments: "Whilst the new ISA limits are good news for all those aged over 50 wanting to make full use of their tax allowances, those with more than £10,000 in other cash savings should especially be looking to benefit. We believe that a lack of awareness about the true value of ISAs as a tax wrapper, and of the increased new ISA allowance, is partly to blame for this oversight among the general public.

"The good news is that this lack of awareness should be addressed fairly shortly. As the date of the increase approaches, financial advisers will be making sure their eligible clients are aware of the opportunity - we've had almost 350 adviser firms ask for our ISA packs in the last two weeks alone - and there will be more advertising and coverage of the change in the news media for those who make their own investment decisions."

Fidelity suggests five key things that eligible investors need to know:
1. The full £10,200 can be invested in a Stocks & Shares ISA or you can invest up to £5,100 in a Cash ISA and put the balance in a Stocks & Shares ISA. This is an increase of £3,000 for Stocks and Shares ISAs and £1,500 for Cash ISAs.

2. You can open one Cash ISA and one Stocks & Shares ISA in each tax year (with combined limit of £10,200). These can either be with a single ISA provider, or with 2 different ISA providers.

3. If you have already invested in an ISA this tax year, you can top it up to the new limit.

4. If you have already invested in a Stocks & Shares ISA this tax year, you don't have to invest in the same share, fund or even asset class, as long as you use the same ISA provider. For example, if in April this year you invested your ISA in a fixed income fund through a platform like Fidelity FundsNetworkTM, you can put the extra £3,000 in a UK equity fund if you are feeling more confident about the stock market.

5. If you are unsure where to invest your ISA but don't want to lose the extra tax allowance, you could put it in an ISA Cash Park. You can then decide at a later date where to invest the money.

Mr Fisher concludes: "The 6th October marks an important date in the diary for any over 50s investor. It is the single biggest ISA limit increase we have seen since the introduction of the tax wrapper ten years ago and the over 50s get a head start in benefiting from this.

"We are living in an environment of rising taxes and by taking simple steps such as maximising each year's ISA allowance, those approaching retirement can really make the most their savings. We urge everyone eligible for the new limit to consider their options carefully to ensure they are not missing out on this year's valuable extra opportunity to shelter more of their hard-earned wealth from the tax man."

Notes to editor:

*Over 50s with more than £10,000 in savings
**Research based on an online survey conducted by Opinium Research between 11-14th September 2009, sample base: 965 over 50s eligible for the new ISA limits.

Cash may only be held in the stocks and share component of an ISA on a temporary basis, for the purpose of investing in qualifying investments. Interest earned will be subject to an HM Revenue and Customs charge of 20%.

FIL Limited ("FIL") and its subsidiary companies serve the major markets of the world by providing investment products and services to individuals and institutional investors outside the US.

For further information, please contact:

Sam Slator
Fidelity International
01737 837 847
07841 783882

Ali Boyle
Fidelity International
01737 837 881
07904 996086

Press office address: Fidelity International, Kingswood Place, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP.

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