UK adults 'missing out' on tax free interest

British adults are missing out on the best saving rates by failing to shop around, claims Lloyds TSB.

Research by the bank found that around nine in ten people are not using their full tax free savings allowance, with 46 per cent of Brits claiming they do not currently have an individual savings account (Isa).

Lloyds TSB savings and investment director Liz Hogbin recommends that savers "shop around", instead of "resting on their laurels".

"For instance, the average interest rate on an Isa balance of £9,000 is 5.36 per cent, but by switching to an account offering 6.5 per cent you could earn over 20 per cent more interest tax free for very little effort," Ms Hogbin explained.

Savers can deposit up to £7,000 in Isa accounts without paying tax on the interest they receive.

According to the government savers do not have to pay any capital gains tax on any money made from an Isa and any UK resident can open one, with the exception of crown employees and members of the armed forces.