40 million people warned they need to put £200 into new bank account

People with £20,000 in savings have been warned by a BBC finance expert. Morning Live star Laura Pomfret explained the importance of owning an Individual Savings Account (ISA) - and warned people are missing out on 'free cash' by not having one.

She warned 78 per cent of UK adults are without one and it means nearly 40 million people in the UK are missing the chance to shield £20k from HMRC. Laura broke down the concept of an ISA as a savings account donned with a "tax-free wrapper".

She said: "There are four different types of ISA. We have the cash ISA, which is kind of much like your standard savings account that we all know and love. A stocks and shares ISA, which means you actually invest in the stock market but still in this account.

READ MORE Jay Slater fled Airbnb feeling 'scared' after 'admitting stealing £12k Rolex'

"Innovative Finance ISA is a little niche, but these are like peer-to-peer lending platforms, crowd funding platforms, but you can do it within an ISA." She went on: "And a Lifetime ISA, which is something that you would use to buy your first home and or for retirement, you can do it for either of those.

"Most people can open one, you have to be aged 18 and up to open one, and you can't hold joint ones like you do savings accounts, so you you hold it yourself." She added: "You could open one for a child., actually, a junior ISA parent or guardian can open them. And today we're gonna be talking about the cash ISA."

She said: "People are missing out...there are 40 million individuals in the UK that don't have an ISA. There's probably a lot of different reasons for that, people might think they've not got enough money to put into one for example. And you don't need a large sum of money to open an ISA, you can do it with a pound.

"With the current interest rate environment, even holding £200 in an ISA, if you have that, can help generate returns, it's free money just while it's sat there."