Next month marks the start of the 10th year of individual savings accounts, a further opportunity for putting up to £7,200 (increased from £7,000) out of the clutches of the taxman.

On past form, millions of savers and investors are expected to take up their annual Isa allowances, sheltering income and gains from tax.

More than 17m individuals – one in three of those eligible – now hold at least one Isa, having poured more than £235bn into the government’s flagship savings scheme since launch in 1999, according to Treasury figures.

About 13m new accounts were taken out in 2006-7 and, in spite of recent stock market falls, some individuals could now have tax-sheltered portfolios approaching £100,000 – more if they have picked market-beating investments.

Soaring property prices remain the transforming factor behind many personal balance sheets in the past decade. But Isas have also proved their worth in building up tax-favoured wealth. Their popularity contrasts with pensions, which offer greater tax breaks but where many savers have been put off by complexity, poor performance and safety concerns.

Describing Isas as a “continuing success”, Tony Vine-Lott, director-general of the Tax Incentivised Savings Association (Tisa), says: “When people talk about falling savings ratios, it’s not about Isas. The numbers [of savers] are far in excess of those who went into Peps and Tessas [predecessors to Isas] and there’s been far more money [going in].”

Further potential boosts are due for the 2008/9 tax year. As well as the £200 increase in the overall Isa limit to £7,200 – with up to £3,600 going into cash (£3,000 currently) – other planned changes include Peps being converted into Isas and the scrapping of the confusing distinction between “mini” and “maxi” accounts.

The government last year also laid to rest fears that it would only allow the scheme a limited life, confirming that Isas would remain a “permanent feature of the savings landscape”.

“Now – 10 years on – we’ve got to simplicity,” says Richard Saunders chief executive of the Investment Management Association. While the original replacement of Peps and Tessas with a single Isa scheme was “laudable”, he says many savers were confused by the new framework. The interaction between £7,000 “maxi” Isas and “mini” cash Isas resulted in some savers breaching the rules and facing the loss of tax breaks. Cash accounts have generally seen more new investment than stocks and shares Isas. They also account for more than 60 per cent of Isa assets, according to Tisa figures.

“In relative terms, cash Isas have been the winners,” says Adrian Coles, director-general at the Building Societies Association, whose members have nearly 40 per cent of the tax-free cash account market. The combination of tax-free interest rates often above those of normal savings accounts and accessibility have made cash Isas a “no brainer” for many savers, say experts. By contrast, investor enthusiasm for stocks and shares Isas has been hit by poor stock markets during 2000-03.

Investors also lost the ability to reclaim a 10 per cent tax credit on Isa shareholdings from April 2004. This meant that equity Isas ceased to offer any income tax benefit for basic rate taxpayers.

The IMA has seen a steady decline in net Isa investment into fund management companies, who provide the majority of stocks and shares Isas.

“Investors have still not got over the 2000-3 stock market falls,” says Saunders, while during recent market turmoil, cash has flowed out of Isas overall.

But, he adds, Isas remain “absolutely a good thing”. Equity investors can build up all profits free of capital gains tax and then switch into bonds for tax-free income at a later date.

Pensions, too, may finally be set for a more positive period. The scrapping of the dividend tax credit at a cost to pension funds of £5bn a year, announced in Gordon Brown’s first Budget in 1997, is often seen as a key contributor to the “pensions crisis” of the past decade. Subsequent initiatives have also been criticised for failing to close the savings gap. U-turns, most notably on plans to allow residential property into self-invested personal pensions (Sipps) in 2005, have added to a sense of “missed opportunities”, says Tom McPhail, head of pensions research at Hargreaves Lansdown financial advisers.

The growth in Sipps and the “A-day” pension reforms, particularly the increase in the annual contribution limit to £215,000 (£225,000 for 2007/8) could prove transformational, among higher earners at least. Proposed personal accounts, expected to carry contribution top-ups by employers and government, may also herald a “culture of retirement saving”, adds McPhail.

Saunders says some investors currently taking funds out of share-based Isas and Peps could be putting the cash into Sipps to benefit from upfront tax relief.

A good next step, says Vine-Lott, would be to unify rules across schemes, such as allowing Aim shares to be held in Isas, as they already qualify for Sipps. He says that moving towards a personal wrapper that incorporated different savings allowances could also make sense. “A more joined-up world is a future many savers would find attractive,” adds McPhail.