How the tax perk works

• YOU can save up to £20,000 into Isas each tax year.

• IF you don’t use this year’s allowance by Tuesday, April 5, you will lose it. Your new allowance kicks in the following day.

• YOU can save into one of each type of Isa each tax year. This means you can pay into a cash Isa, stocks and shares Isa, innovative finance Isa – and a Lifetime Isa if you are eligible for one. However, the total must not exceed £20,000 and you cannot save into more than one of each type of Isa.

• YOU do not have to pay tax on interest, capital gains, or dividends earned in an Isa – even if the value of your Isa breaches £1million.

• AN Isa is not free from inheritance tax, unless transferred to a spouse or civil partner.

• CHILDREN also have an Isa allowance, which is currently £9,000 a year. When they turn 18, their Junior Isa is transferred into an adult Isa and they can access it for the first time.

• ALL UK residents aged 16 and over can have a cash Isa, but must be 18 before opening a stocks and shares Isa.

• SOME – but not all – Isas are flexible, which means you can withdraw money and replace it within the same tax year without it counting towards your allowance.

• YOU can’t share Isa accounts – even married couples and civil partners. The ‘I’ in ‘Isa’ stands for individual, after all.

• THERE are about 8.6 million people in the UK with more than £10,000 held as cash which they could invest, according to money regulator the Financial Conduct Authority.

• THE Isa limit has been held at £20,000 since 2017. Had it risen with inflation, it would now be worth over £22,500.