Savers ploughed an additional £42 billion into cash ISAs during the first six months of 2024 as they looked to shield their money from tax, says Paragon Bank.
Paragon’s analysis of CACI data showed that at the end of June, there was £351.6 billion held in adult cash ISAs, compared to £309.3 billion at the end of December 2023.
Fixed-term cash ISAs led the surge, increasing from £157.9 billion to £188.5 billion over the six-month period. Instant access ISA balances also rose by £11.2 billion to £156.4 billion.
Paragon said the value of cash held in fixed-rate ISAs surpassed that of non-ISA equivalents in June 2024, for the first time since November 2022.
Overall, total adult cash savings jumped by £70.7 billion to £1.18 trillion during the first half of the year.
Demand for ISAs has been driven by savers seeking to shield their interest payments from tax as stronger rates boost returns, the bank said. According to HMRC, £10.4 billion is expected to be raised in tax from savings interest this year, compared to £9.1 billion in the 2023/24 tax year.
Derek Sprawling, managing director of savings at Paragon Bank, said: “The increase is understandable given the growth in savings rates means more savers are facing the prospect of paying tax on money held in non-ISA accounts.
“Even though rates have moderated from their peak, there are still plenty of higher-rate taxpayers who could still benefit from utilising their ISA allowance to limit their exposure.”
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