Cash ISAs enjoyed a bumper 2025, as savers rushed to utilise their allowance before government cuts were announced.
The latest Bank of England stats showed £57 billion was paid into cash ISAs last year. A total of £5.2 billion was paid into accounts in December alone, marking a record for a non-tax year end month.
The figures for 2025 show the highest inflows in the past 10 years and the biggest since the ISA allowance rose to £20,000 in 2017.
Laura Suter, director of personal finance at AJ Bell, said: “It’s a stark contrast to just four years ago, in 2022, when there were net outflows from cash ISAs, as more people took money out of them than paid into them.
“But rising interest rates coupled with a Personal Savings Allowance that has remained unchanged for a decade means that more people are being hit with tax on their savings and seeking the shelter of cash ISAs. At the same time, because income tax bands have also been frozen, more people are being pushed into the next tax bracket, meaning their Personal Savings Allowance is halved or disappears altogether. All of this means cash ISAs have become much more attractive to savers.”
Suter said for years, cash ISAs were something of a “forgotten product” in the savings market, often offering lower interest rates than non-ISA savings accounts. However, there has been a shift in recent years, with almost 90% of all the inflows to cash ISAs in the past decade occurring over the last three years alone.
Speculation about the future of cash ISAs ahead of the Autumn Budget also boosted inflows.
“There’s no doubt that the rumours around cash ISAs being cut and the eventual decision to slash the cash ISA allowance for under 65s in last year’s Budget will have meant more people rushed to use the accounts, despite the fact the cut won’t happen until April 2027,” said Suter. “Inflows to cash ISAs in December 2025 were 47% higher than the same month a year earlier, showing the Reeves effect on the accounts.”
Suter said the popularity of cash ISAs is unlikely to wane in 2026, as more people seek to maximise the allowance before next April. Research by AJ Bell carried out last year found that if the cash ISA allowance was cut, half of savers would put their money in a taxable savings account rather than investing it, running counter to the Government’s original aim to boost retail investing.
“It means lots of savers will be looking to maximise their ISA savings this year to reduce their future tax bill,” added Suter.
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