Investors have until 5 April to make the most of their annual tax allowances, which includes £20,000 which can be allocated to any type of ISA: cash, stocks and shares, lifetime, innovative finance and help to buy.

Here, Hargreaves Lansdown outlines seven reasons to consider allocating to an ISA this tax year:

1. They’re tax-free

Putting your investments into an ISA means they’re free of income tax, capital gains tax and dividend tax for life. This is important at a time when 48% of us are worried that taxes are set to rise.

2. They’ll free you from tax return hell

There’s no need to include details of your ISAs on a tax return.

3. You can get more of the things you want in life

Given that 13% of people are using their ISA to save towards a holiday, 10% for home improvements and 11% to buy a property, it means we can get more of the things we want in life – without having to give a big chunk of it to the taxman first.

4. You may be able to get free money from the government

If you’re aged 18-39 and saving for a property deposit or towards retirement, you can put up to £4,000 in a Lifetime ISA each tax year – and get a bonus from the government of up to £1,000.

5. You can use ISAs to keep you out of tax traps

If you’re close to a tax threshold like the £46,350 higher rate tax threshold, or the £100,000 limit where you start to lose your personal allowance (and therefore face an effective tax rate of 60%), you may be able to use ISAs to avoid falling into the trap. If income from savings and investments are part of the reason you’re pushed into this new threshold, rolling them into ISAs means the income you take from them will become tax-free.

6. You can save tax on existing investments outside an ISA wrapper

If you have shares or other investments outside an ISA wrapper, a process called ‘Bed & ISA’ allows you to sell them and buy them back within the ISA wrapper immediately – protecting them from tax from that moment onwards.

There are a couple of things worth noting to keep you on track: when you sell them you should try to keep the gains in any one tax year within the annual capital gains tax allowance (£11,700 in the current tax year), so there’s no tax to pay on your profits. And when you buy, you’ll be using up your ISA allowance for the current year.

7. Save money on a Sharesave scheme

If you have a Sharesave scheme at work, which allows you to buy shares with the proceeds of your savings. If you make more than the capital gains tax allowance for the year when you sell them, you’ll be subject to tax. However, if you transfer your shares to an ISA within 90 days of getting them, you’ll protect them from tax altogether. You can put in your full ISA limit of £20,000.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, concluded: “Whether you’re looking for a way to avoid being caught out by rising taxes or falling into tax traps – or you could do with a free money boost from the government – it’s worth knowing how ISAs can leave you better off.”