The number of people saving into an Isa fell to its lowest level in nearly 20 years, according to annual HM Revenue & Customs figures published today.
This comes after a similar drop the previous year, with an almost 13 per cent fall in the number of Isas opened.
However the update also shows the amount of money saved into Isa accounts in 2017/18 has actually increased in the past year to £69.3bn.
That means fewer people are using the accounts but those that do are saving more, which is a turnaround following a 23 per cent fall in the amount saved within an Isa during the previous two years.
The number of Junior Isas opened in 2017/18 was up by more than 100,000 to 907,000.
Total Adult Isa funds rose to a record level of £608bn.
Meanwhile the first figures have been released for the Lifetime Isa giving an initial look at how popular the market has been since it was launched in April 2017.
A total of 166,000 accounts have been opened and £517m saved – averaging £3,114 per account.
AJ Bell personal finance analyst Laura Suter says: “The effect of the personal savings allowance, which launched in 2016 and gives £1,000 of interest tax-free for basic-rate taxpayers or £500 for higher-rate taxpayers, is continuing to diminish the appeal of Isas for savers.
“However, for those individuals who are likely to move into the next income tax bracket soon, or those fearful of government change to the personal savings allowance, it could be prudent to start stashing cash away within the Isa wrapper.”