During the 2017-18 tax year to April 2018, the popularity of stocks and shares ISAs continued to grow, with 246,000 new accounts subscribed to. The amount paid into this type of ISA account hit a record £28.7bn over the period, up from £22.3bn the previous tax year.

Stocks and shares ISAs have been popular investments for millions of people since they were first introduced back in 1999, not least because they combine the opportunity to save for the long-term with generous tax benefits.

Higher limits

The amount you can save during this tax year is £20,000. It’s important to remember that any unused allowance can’t be carried forward, so in order not to miss out on the tax benefits, you need to ensure you have your money invested before the tax year-end.

Tax advantages

Any increase in the value of the investments held in a stocks and shares ISA is free from Capital Gains Tax. Income from interest-paying investments, such as government and corporate bonds, is free of income tax, so too are dividends paid on equity investments.

Cash or stocks and shares

You can put part of your annual ISA allowance into a cash ISA. Choosing between funding a cash ISA and a stocks and shares ISA will depend on your investment goals and your personal risk profi le. Unlike cash, stocks and shares are subject to market volatility.

Generally speaking, if you’re planning to withdraw your funds within the next five years, say for a deposit on a home or other major expense, then a cash ISA would be the low risk option.

The value of investments and the income they produce can fall as well as rise. You may get back less than you invested. Tax treatment varies according to individual circumstances and is subject to change.