Tax year-end: Get the most from your ISAs

As tax year-end approaches, it’s the perfect time to re-evaluate if your Cash ISAs are still providing you with value and that you’re making sure you reap the benefits of all of your tax-efficient annual allowances.


  • High inflation rates mean that Cash ISAs continue to lose value in real terms, despite rising interest rates.
  • Achieving better growth and financial well-being could come from a combination of Cash and Stocks and Shares ISAs.
  • How you can achieve your personal long-term goals by rebalancing your cash savings and stocks and shares investments.

What the current landscape means for Cash vs Stocks and Shares ISAs

Interest rates have increased dramatically recently, and it appears that this trend will continue this year until the economy settles again. Good news!

The recent rise in inflation might mean your Cash ISA funds are performing better. But that also means your money’s spending power is falling in real terms. Your gains must outpace inflation rather than lag behind it if you want to make the most of your ISAs in the long run.

In spite of this, Cash ISAs are still very common. Cash ISAs made up 66% of all accounts in the 2020–21 tax year (the most recent year for which figures are available), although the number of Cash ISAs has decreased more quickly than the number of Stocks and Shares ISAs.1

Working out which is best for you

In addition to being incredibly tax-efficient, a Cash ISA is easily accessible so if you suddenly face an unforeseen bill, you have a ready cash supply. The drawback is that your money’s actual spending power gradually decreases if interest rates are lower than inflation rates.

You take on more risk when you invest in Stocks and Shares ISAs, but therefore have the potential for bigger growth. Your capital is also at risk, unlike the Cash ISA. A wide variety of company shares, bonds, and other assets are available to invest in, but many investors opt for diversified portfolios of investments to diversify their risk.

Your savings will lose value if markets decline. However, the longer you invest, the better your ability to ‘ride out’ market volatility. You could eventually make more money than with a Cash ISA and you won’t have to pay taxes on any profits or income either.

Making the most of your ISAs

If you keep a large portion of your assets in Cash ISAs or cash accounts, you risk missing out on growth that might significantly help you to live the lifestyle you see in the future.

We help our clients determine what’s best for them and their families every day. Most individuals discover that a combination of stocks, bonds, and cash ISAs is the key to their financial security and well-being.

Before tax year-end, it’s a good idea to think about a few important questions:

How long have you had your Cash ISAs?

Cash may have accidentally entered your long-term investment plan if you have any Cash ISAs that are older than five years. If you have money that you might need in the short or medium term, it’s wise to keep it in cash. However, over a longer period of time, you might not see the same degree of growth and returns as a Stocks and Shares ISA.

Is a Cash ISA the best choice for you?

It’s also important to think about how crucial Cash ISAs are to your overall financial plan. Since the Personal Savings Allowance (PSA) was implemented in 2016, basic- and higher-rate taxpayers have had access to tax-free interest on money in cash accounts up to £1,000 and £500 respectively. Additional-rate taxpayers do not have an allowance.

Therefore, you still have plenty of time to save money before you have to start paying taxes on the interest you earn. If you use the PSA, you may be able to free up more of your £20,000 ISA allowance if you intend to invest in stocks and shares.

Keep in mind that the amount you can save in standard accounts before income taxes will decrease whenever interest rates rise.

It’s often advisable to invest in assets that have the potential to perform better over time and actually maximise the tax benefits of ISAs – which means stocks and shares. The most important lesson to learn from this is that the chance of growth increases the longer you invest for. This is why our  investment strategy is based on decades rather than days.

In order to determine if Stocks & Shares ISAs should be playing a larger part in your own financial future, it would be wise to speak with us about your own personal ISA mix before tax year-end.

Even for seasoned investors, increasing your stock market investments might feel intimidating. Here is when expert, personalised guidance truly matters. To provide you with the best chance of short- and long-term financial well-being, as well as a future that is everything you imagine, we can help you choose how much cash you want to have on hand and how much – if any – you want to invest in stocks and shares.

Some things to think about

If you have multiple ISA accounts, you may also find it easier to keep track of them if you consolidate them into one plan.

If you transfer as cash, you’ll be out of the market until the transfer is complete. You won’t lose out if the market falls, but your money won’t be subject to any income or growth if the market rises in this period. If you transfer a fixed-rate cash ISA before the end of the term, you may have to pay a fee.

If you’re transferring funds from a Stocks & Shares ISA you’ll remain invested until the transfer. You’ll be unable to switch or sell these funds while the market falls or rises during this time.

Where appropriate, you can move money from an existing Cash ISA into a Stocks & Shares ISA without it affecting your allowance for the current year.

You may always want to consider that your current provider could charge exit fees.

Taking stock before tax year-end

Regularly discussing issues with a financial adviser is always important, but as tax year-end approaches, it becomes even more crucial. Not only is the wider economic climate changing right now, but so are many people’s personal circumstances and long-term objectives as they adjust to the new financial reality.

Taking stock long before the tax year ends gives you plenty of time to make tax-smart changes to your ISAs and investments, so you can feel confident in your choices.

The value of an ISA with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than you invested.

An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a Cash ISA.

The favourable tax treatment of ISAs may not be maintained in the future and is subject to changes in legislation.

Cash ISAs are not available through St. James’s Place.

Wellesley is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website

Wellesley is a trading name of Wellesley Investment Management Ltd.


Commentary for annual savings statistics: June 2022,, 15 June 2022


SJP Approved 13/02/2023