ISA savers have been urged to do some research to check are not missing out on much better savings growth. A key advantage of ISAs is they are entirely tax-free, meaning you pay no tax on any interest earnings or investment growth within these accounts.

You can currently deposit up to £20,000 each tax year into these accounts and keep their tax-free status. It’s worth thinking about how you want to use this allowance, as Labour announced in the Autumn Budget that there will be changes from the tax year starting April 2027.

From this fiscal year, savers aged under 65 will only be able to use up to £12,000 of this allowance for deposits into either cash accounts or stocks and shares accounts. The remaining £8,000 allowance will only be available for stocks and shares ISAs.

One group calculated that by investing just £3 a day from age 20 to 70, your savings could grow to between £560,698 and £2,291,845.

Laura Purkess, personal finance expert at Investing Insiders, reminded savers that the £20,000 allowance is shrinking in real terms. She warned: “Over the past few years, inflation has risen considerably, peaking at around 11.1 percent in October 2022, and wages have also risen considerably to keep pace.

“Yet, like many thresholds, the ISA allowance has been frozen at its current limit since 2017 and will remain fixed until 2030/31. This means the amount you can shield from tax in an ISA is effectively shrinking in real terms, and as wages rise, more people will hit the limit faster. Ideally, the ISA allowance would be increased with inflation to maintain its real value.”

Getting the most out of your ISA allowance

The savings expert shared a simple tip to make sure your ISAs are performing well. She urged: “To get the most out of your ISA, the number one tip is to make sure you’re in the top-paying accounts on the market and that you are using the account most suitable for you.

“For cash ISAs, don’t give into inertia – switch to the top rate, as doing so could boost your savings by thousands of pounds long-term.” She also warned against an easy mistake that can needlessly use up your allowance.

Ms Purkess said: “Don’t take your cash out of your ISA to switch – you can transfer your ISA directly so that transferring won’t affect your annual allowance.” She also said it’s worth checking you are not paying high fees for a stocks and shares ISA, which eat into your returns.

The team at investing app Kaldi encouraged savers to see if they can get better returns from their stocks and shares ISAs. Mark Burges Watson, co-founder of Kaldi, said: “The most important habit is understanding real returns. If a cash ISA pays less than inflation, savings are going backwards even if the balance looks stable.

“Investing early and regularly matters far more than timing the market. Automating contributions makes a huge difference, particularly for people who struggle to find spare cash.”