Making the most of your ISAs before tax-year end

At a glance

  • Even though interest rates have risen, high inflation rates mean Cash ISAs are still losing value in real terms.
  • A mix of Cash and Stocks and Shares ISAs may help you achieve better growth and financial wellbeing.
  • We can help you rebalance your cash savings and stocks and shares investments in line with your personal long-term goals.

Taking stock of your ISA investments 

As the tax year comes to a close, and you’re checking that you’ve made the most of all your tax-free annual allowances, it’s a perfect time to review whether you’re still getting value for money from your Cash ISAs.

This year, interest rates have risen significantly and that looks set to continue into 2023, or until the economy stabilises again. At the time of writing, the best rate on an easy-access Cash ISA is 2.25%.1 That’s good news – any savings you have in Cash ISAs are earning more than 12 months ago.

Cash v Stocks and Shares ISAs – the current landscape

However, although your Cash ISA savings are doing better – with inflation currently topping 10.1%2, the spending power of your money is going down in real terms. To get the most out of your ISAs in the long-term, you need your returns to beat inflation, not fall short of it.

Despite this, Cash ISAs remain hugely popular. In the 2020/21 tax year (the last year for which figures are available), Cash ISAs accounted for 66% of all accounts, although the number of Cash ISAs has dropped off faster than the number of Stocks and Shares ISAs.3

Working out which is best for you

A Cash ISA is conveniently easy to access, as well as being very tax efficient. It’s a source of ready cash if you hit an unexpected expense.  But the downside is that, if interest rates are lower than inflation rates, the actual spending power of your money is slowly going down.

When you invest in Stocks and Shares ISAs, you are accepting a higher level of risk, in exchange for potentially greater growth. But unlike the Cash ISA, your capital is also at risk. You can invest in a wide range of company shares, bonds and other assets, and most people opt to invest in funds – mixed portfolios of investments – to spread their risk.

If markets fall, the value of your savings will dip. However, the longer you stay invested, the more you can ‘ride out’ that market volatility. Over time, you have the potential to earn more than in a Cash ISA. And, of course, you still won’t pay tax on any gains or income. 

Getting the most out of your ISAs

If you’re holding a lot of money in Cash ISAs or cash accounts, you may miss out on growth that could go a long way to help you achieve the lifestyle you imagine, in years to come.

Working out what’s best for you and your family, is something that we help our clients’ with every day. Most people find that financial wellbeing and security comes down to a combination of both Stocks and Shares, and Cash ISAs.

Now is a good time to consider some key questions, ahead of tax-year end:

How long have you had your Cash ISAs?

If you’ve had any of your Cash ISAs for more than 5 years, then cash may have unwittingly become part of your long-term investment strategy. Holding your wealth in cash is the right thing to do if it’s money you might need in the short- or medium- term. But over the longer term, you may not get the same level of returns and growth as a Stocks and Shares ISA.

Do I need my Cash ISAs?

It’s also worth considering how important Cash ISAs are in your overall financial plan. The introduction of the Personal Savings Allowance (PSA) in 2016 means that basic and higher-rate taxpayers can earn tax-free interest up to £1,000 and £500 respectively from money held in cash accounts. There is no allowance for additional rate tax payers.

So, you can still save a substantial sum of money before you’ll ever need to pay tax on the interest you earn. By taking advantage of the PSA, you can potentially free up more of your £20,000 ISA allowance if you want to invest in stocks and shares.

Do bear in mind that, whenever interest rates rise, the amount you can save in standard accounts before income becomes taxable will reduce. 

Finding the right mix of Cash and Stocks and Shares ISAs

To really make the most of the tax perks of ISAs, it’s usually best to invest in assets which have the potential to do better over time – and that means stocks and shares.  The key takeaway here is that the longer you invest for, the more you increase the opportunity for growth. Which is why our investment approach is based on ‘decades, not days’.

So before the end of this tax year, it’s worth having a chat with us about your own personal ISA mix, to see whether Stocks & Shares ISAs should be playing a bigger role in your personal financial future. 

Even for experienced investors, investing more in the stock market can seem a daunting prospect. This is where expert, empathetic advice really counts. We can help you work out how much you want to have in cash, and how much you feel confident in investing in stocks and shares to give you the best chance of short- and long-term financial wellbeing, and a future that’s everything you imagine. 

Some things to be aware of

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.

It’s possible, where appropriate, to transfer money out of existing Cash ISAs into a Stocks & Shares ISA without it reducing your allowance for the current year.

You should also be aware that your current provider may charge exit fees.

Taking stock before tax-year end

Talking things through with a financial adviser on a regular basis is always important, but coming up to tax-year end, it’s of critical importance. It’s not just the wider economic climate that is changing at the moment; many people’s personal circumstances and long-term goals are changing too, as people adapt to the present financial landscape. 

Taking stock well ahead of tax-year end means you’ve got plenty of time to make tax-smart adjustments to your ISAs and investments and 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.


1Today’s best ISA rates,, figures correct on 27 October 2022

2Bank of England When will inflation come down, 27 October 2022

3Commentary for annual savings statistics: June 2022,, 15 June 2022

SJP Approved 21/12/2022