Where are your ISAs?

Even so, a dig into the HMRC spreadsheets highlights some interesting facts:

• In 2022/23, there were 12.5 million subscriptions to adult ISAs (including 767,000 to LISAs). That was down by 15% on the subscriptions made ten years previously, in 2012/13.

• Despite the fall in the subscription numbers, the amount subscribed increased by 26% over the same period to a total of £72.6 billion, roughly in line with inflation between April 2012 and April 2022.
• The increase in subscriptions was not evenly spread, with the money flowing into cash ISAs virtually unchanged, whereas stocks and shares ISAs enjoyed a 70% increase. Nevertheless in 2022/23, cash ISAs still attracted nearly half as much again as their stocks and shares counterpart.
• In terms of value, stocks and shares ISAs accounted for 59% of the total ISA worth of £726 billion in April 2023, with cash ISAs at 41%. Ten years previously, the split was just about 50/50.

The relative decline of cash ISA subscriptions and values is unsurprising, but its modest fall is perhaps much more so. The Bank of England Bank Rate was stuck at less than 1% from March 2009 until May 2022, making the returns on many cash ISAs next to invisible at times. In addition, the introduction of the personal savings allowance in April 2016 allowed many savers to receive interest on cash deposits tax free without needing to use an ISA.

If you have existing cash ISAs or are intending to subscribe to one before 5 April 2025, it is worth asking yourself – or your adviser – three questions:

• What interest rate am I earning now, and will it fall if the Bank of England keeps cutting rates?
• Am I making the most of the personal savings allowance?
• Would a stocks and shares ISA be more appropriate, given my financial goals?

The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested.

Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

Tax treatment varies according to individual circumstances and is subject to change. The Financial Conduct Authority does not regulate tax advice.