No matter where you turn, saving money is harder than it’s ever been. Pay cuts, reduced bonuses, tax increases and interest rate drops, to name just a few of the things that Britain is struggling with today. According to Nationwide 25% of all individuals do not save at all, while almost 60% of people save less than they feel they would need if their income dried up. In today’s climate it is more important than ever to build up a sufficient savings buffer to help you get through any unforeseen events that impact your income.

Nationwide’s survey attributes the low savings level to the current interest rate of just 0.5%, down from 5% a year ago. Its not surprising that only 16% of people feel now is a good time to save. However, one way you can get the best deal on savings is to utilise your ISA allowance which has been recently increased from £7,200 to £10,200. The amount that can be put in, in cash has been increased from £3,600 to £5,100. The other £5,100 can be invested into stocks and shares with any gains made tax-free.

At the current rate of interest, a quick internet search will reveal that 3.55% seems to be the best deal on the market. Interestingly, although the government encourages citizens to use the allowance, uptake has been remarkably slow this time round. A recent survey by the Co-Operative Bank revealed that the 73% of people who are yet to invest in an ISA will not do so in the near future.

One segment that will be keen to invest in an ISA are those who are impacted by the recent rise in income tax for high earners. Individuals earning over £150,000 a year will have to pay a whopping 50% income tax on earnings above this amount. Tax-efficient savings will play a small part in reducing their overall tax liability and should be used to maximum effect.