The number of cash ISAs increased 11% to 7.9m in the 2022/23 tax year but the number of Stocks and Shares ISAs fell, according to latest figures from HMRC.

Stocks and Shares ISAs dropped slightly from 3.9m to 3.8m.

Today’s figures reflect also reveal a wider UK gender gap in investing.

Despite holding 51.8% of all ISAs, women held only 42.6% of Stocks & Shares ISAs. In the 2021/22 tax year, 1.9m men subscribed to a Stocks and Shares ISA, compared to only 1.4m women.

The total number of adult ISA accounts subscribed to in 2022/23 was 12.5m, a rise from 11.8m the previous year.

Junior ISA accounts increased from 1.21m in 2021/22 to 1.25m in 2022/23.

Lifetime ISA accounts also increased in popularity, with £2.4bn paid into LISAs in 2022/23.

Close to 100,000 people withdrew savings from their Lifetime ISA accounts in the 2023/24 tax year, with £75.3m in unauthorised withdrawal charges. This was a 30% increase from figures seen the previous year.

Rachael Griffin, tax and Financial Planning expert at Quilter, said today’s LISA figures demonstrated the need for reform.

She said: “These concerning figures illustrate just how many people continue to face a difficult battle over the need to save for the future versus the need to pay their bills, and higher costs have clearly won as so many have had to stomach the 25% charge to gain access to their money.

"In what remains a financially challenging time for many, we should not be overly penalising people for using their hard-earned savings. Yet, the punitive 25% penalty means that those who have done the right thing by saving are penalised if they need to access their cash.

“The figures reiterate the desperate need for reform of the Lifetime ISA. The LISA attempts to fix two polar opposite problems; saving for a house and saving for retirement, and fails to do either adequately with even its name not alluding properly to either of its main purposes.”