Over the next few weeks, the media will be full of adverts encouraging people to invest in Isas before the financial year ends on April 5.

However, these tax-free savings vehicles won't be the right choice for everyone.

Anybody aged 16 or over can put up to £15,000 into an Isa, or individual savings account, this tax year, and the annual allowance rises to £15,240 from April 6. The total can be made up of cash or shares, or any combination of the two.

Unlike ordinary savings and current accounts, where - depending on the holder's tax bracket - at least 20 per cent of the interest goes to the Revenue, there is nothing to pay on Isa interest or dividends and no capital gains liability, regardless of income level.

Yet many people fail to use their allowance because they are unaware of these potentially significant benefits.

According to NFU Mutual, there is £85 billion of unnecessary tax paid on savings and investments held outside these tax-efficient wrappers. The financial services provider says the average amount of cash held in taxable non-Isa accounts is £13,175, comfortably within this year's limit.

In a survey of Scottish savers and investors for Triodos Bank, more than a third admitted to not knowing the difference between stocks and shares Isas and cash ISAs while 15per cent said they didn't even know there were two types of Isa.

Less than half of those with an Isa actually know how much money they can put in it and 14per cent think the limit is £3,600 - the cash limit back in 2008.

In Scotland, only 4 per cent of adults have Isa savings. Sean McCann, a chartered financial planner at NFU Mutual, said: "If you have savings and investments but no Isa, it means you're probably losing out.

"Putting money in an Isa is one of the simplest things to do to help protect it from the taxman."

Investing in shares is a risky business, though, as values can fall as quickly as they rise, so they are best avoided by those who can't afford to suffer a loss.

There are no such risks attached to cash Isas, as you can always get out what you put in. Yet, with interest rates languishing at historic lows, even those who do understand how they work frequently think it won't be worth the effort of moving their money from taxable accounts.

Figures from comparison site MoneySupermarket.com show this is not the case. It calculates that someone who had invested their full allowance in each year's market-leading cash Isa since they were launched in 1999 would have earned £22,500 in interest and amassed a total balance of over £93,000.

A basic rate taxpayer who put the same amount into a standard easy access account paying Bank of England base rate would have earned just £8,300 - a loss of £14,200, while a higher rate taxpayer would have earned just £6,100, making them £16,400 worse off.

Kevin Mountford, head of banking at MoneySupermarket.com, said: "The majority of savers have money sat in accounts paying lower than the Bank of England base rate, which is at a 300-year low of 0.5 per cent, and in many cases far lower.

"But by taking five minutes to shop around, you can earn up to five times as much interest."

As with taxable accounts, though, new offers come along all the time and older Isas become increasingly uncompetitive. This means that anyone with savings from previous tax years should check annually whether they can get a better deal elsewhere.

However, it is vital to stick exactly to the rules. Mr Mountford explained: "You must choose an account which allows transfers of existing Isa money in and follow the correct transfer procedure, otherwise the tax-free status on your savings may be removed."

Everyone should have some cash set aside for emergencies - the equivalent of at least three months' earnings is wise - and this can be kept in an instant access Isa, to maximise returns while ensuring it can be withdrawn without delay.

Several providers, including NS&I, Skipton Building Society and the Post Office, have instant access accounts paying 1.5 per cent. For a basic rate taxpayer, this is equivalent to earning almost 1.9 per cent in an ordinary account.

But, beyond this level of rainy day saving, Isas are not the answer for everyone. Anyone paying interest on credit cards, loans or an overdraft would be much better channelling additional spare cash into clearing this rather than further savings.

This is because, unless their debt is interest-free, they will be paying out many times more than it is possible to earn in even a market leading Isa.

Mortgage holders whose lender allows overpayments should also check whether they could make worthwhile long-term savings by using surplus funds this way instead.

For those without significant debt, cash Isas are a wise choice. Anyone who can afford to leave their money untouched for several years should consider a fixed-rate offer, as these tend to pay more than instant access versions.

Clydesdale Bank is offering 2.1 per cent interest on a two-year investment -equivalent to earning just over 2.6 per cent in taxable interest. The account is branch based and a minimum of £2,000 is needed to open it.

Anyone who can spare at least £500 for the same period can make 1.95 per cent with an online account from the Post Office.

A five-year investment can earn 2.3 per cent at Leeds Building Society, where the minimum opening balance is just £100. The account can be operated online, through a branch or by post.