Investors have withdrawn £6 billion from individual savings accounts in the past year to meet the rising cost of living, according to new research.

The study from Abbey, the UK bank, showed that on average Isa savers have withdrawn £579 each, or 26 per cent of the average Isa balance of £2,200 in 2006-2007, denying themselves the tax benefits associated with the accounts.

Almost a third (31 per cent) were forced to dip into their Isa to meet rising living costs. A further 15 per cent blamed increases in specific bills, including mortgage repayments and utility charges. More than a quarter of those surveyed said that their Isa money had gone towards expenses such as holidays or car purchases and 8 per cent used their funds toward a high street shopping trip.

Reza Attar-Zadeh, director of savings and investments at Abbey, warned that dipping into Isa savings could prove costly in the long term.

He said: “Any withdrawals made can not be replaced, so that part of your allowance would be lost forever. If you’re saving towards a goal such as a home deposit or looking to maximise the amount of cash you have put away for retirement then the advice must be to try and reduce your outgoings rather than dip into your Isa pot.”

The top fixed rate cash Isa is from West Bromwich, paying 6.37 per cent on a deposit of £1,000 and over. Principality pays the same rate on a miminum deposit of £3,600. HSBC pays 6.25 per cent on a minimum deposit of £1.

About 41 per cent of UK adults hold Isas, which allow savers to invest £3,600 a year in cash, tax-free, or £7,200 in equities. Savers pay income tax on interest earned on ordinary savings accounts.

Of the 1,000 customers surveyed by Abbey, 13% used part of their Isa to help friends and family with their finances while almost a quarter turned to their savings for an unanticipated cost such as an emergency home repair.