Britons continue to shovel cash into tax-free Cash ISAs to protect their hard-earned savings from chancellor Rachel Reeves’s constant tax grabs. In April last year, savers paid a record £14billion into Cash ISAs. This year they followed up by depositing another £12billion.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, called the sums “staggering”, and said the rush was fuelled by Reeves’s plan to cut the Cash ISA limit for savers aged under 65 from £20,000 to £12,000 from April 2027. She added that the chancellor’s move to freeze income tax thresholds until 2031 has also pushed more savers towards using their tax-free allowance. “Savers who have not yet taken advantage of their 2026/27 ISA allowance would be wise to do so.”
Springall said shop around as it is still possible to find Cash ISAs paying more than 4%. “Interest rates are expected to stay higher for longer, so it’s well worth comparing older pots too and making the switch.”
Clare Stinton, senior personal finance analyst at Hargreaves Lansdown, said savers are also pulling money out of ordinary taxable accounts to shelter it inside the tax-free ISA wrapper.
She said it’s easy to understand why, with Reeves planning to impose a 2% income tax surcharge on savings interest above the personal savings allowance from next April. “Interest will be taxed at 22% for basic rate taxpayers, 42% for higher rate taxpayers, and 47% for additional rate taxpayers.
You don’t need a fortune tucked away outside of ISAs and pensions to start creating unwanted tax bills.”
Stinton added: “We’re seeing a big difference between top and bottom paying accounts, with online banks and saving platforms often offering the most competitive deals.” Acting sooner rather than later could both boost returns and reduce future tax bills. For once, it really does make sense to follow the crowd.