As the new financial year approaches we are all enjoined by the Personal Finance press to make full use of our annual ISA allowance.
1. Cash ISAs: the returns on cash investments is rubbish and barely able to keep up with inflation - often not even that. I know that the interest payments are tax free, and savings in standard savings accounts have 20% subtracted from the interest. However you may be able to find saving accounts that will make up for this. For example a savings account giving 3% would be equivalent to a 2.4% one in a cash ISA.
OK I suppose you might be likely to do a bit better in an ISA on the whole but it's all very marginal at current rates.
2. Stocks and shares ISA. If I understand correctly share dividends have 10% deducted whether they're in an ISA or not, so there's no difference.
Of course for higher rate taxpayers they really do make a difference.
On a yearly basis - no they might not make much of a difference (though I am getting 3.1% on my cash ISA and only 3.2% on my cash savings). It isn't much, but it is still extra money (plus the tax saving) in my pocket.
Where I see the major benefit is in the longer term - I have been putting the max allowance into a cash ISA almost since the beginning, and shifting them around to get the best rates I could. I now have nearly £60k in ISA's.
Stock & Shares
The benefit, again increasing the more you have in them, is the tax free capital gain element - admittedly you have to have quite a lot (or be lucky in your investments) to benefit from this given the Annual CGT Allowance.