Three in five (60%) of Cash ISA holders would consider moving some of all of their money into a Stocks and Shares ISA, according to a new report.

Up to £216bn could be invested into Stocks and Shares ISAs if savers had a better understanding of ISA rules, according to the study by Royal London.

A quarter of the 4,000 savers surveyed by the provider said that knowledge and confidence was holding them back from investing. An additional 16% said they would not know where to invest.

Lack of knowledge was more of a concern for younger savers, with almost a third (31%) of 18-34s and 35-49s (30%) admitting they do not understand stocks and shares, compared to just 17% of those over the age of 70.

When asked questions that tested understanding of key ISA tax rules, there was a lot of confusion.

Two-thirds (66%) either incorrectly said they paid tax on gains from Stocks and Shares ISAs (25%) or admitted they don’t know (41%). More than a third (37%) of 18-34-year-olds believed you pay tax on gains from a Stocks and Shares ISA, much higher than other age groups (26% of 35-49s, 18% of 50-69s and 16% of 70+).

Sarah Pennells, consumer finance specialist at Royal London, said: “It’s concerning that, over 25 years since ISAs were launched, the main tax benefits of investing through a Stocks and Shares ISA are misunderstood, with two thirds of adults either thinking they pay tax on gains from a Stocks and Shares ISA or being unclear.

“There’s a significant opportunity to help consumers understand the tax benefits of ISAs and what’s involved in investing, so people can make a more informed decision about what’s right for them and their financial goals.”

Potential better returns would be the main driver for those with a Cash ISA to move some of their money over to a Stocks and Shares ISA (39%), with this rising to half (50%) of those aged 18-34.

A quarter (27%) said they could be tempted to move their money into a Stocks and Shares ISA with the ability to make returns above inflation.

When it came to the other barriers holding back savers from investing into Stocks and Shares ISAs, 42% cited not having enough money. Women were more likely to say they did not have enough money to invest than men (45% vs 38%).

Other barriers included concerns about potential financial losses (35%) and the accessibility of their money should they need it (12%).

• Opinium surveyed 4,000 UK adults between 4 and 11 April on behalf of Royal London.