Britons are saving and investing harder than ever while looking to ensure their money works as tax efficiently as possible.
That’s one of the key takeaways from HMRC’s latest Annual Savings Statistics, which show a staggering 16.8 million adult ISA accounts were subscribed to in the 2024-25 tax year, up from 15 million in 2023-24.
Perhaps the most notable trend is the growing interest in Stocks and Shares ISAs. An additional 802,000 accounts were subscribed to compared with 2023-24, a year when soaring Cash ISA demand dominated the headlines as higher saving rates encouraged more people to explore more tax-efficient options.
The figures suggest the Government’s ambition to get more Britons investing is gaining traction, though a desire for greater tax efficiency is also likely to be playing a role as frozen allowances and thresholds expose more savings and investments to tax.
There’s more work to do, however.
While subscriptions to Stocks and Shares ISAs are rising, cash continues to dominate. Of the £135.7bn subscribed to adult ISAs overall in 2024-25 – up £32.7bn year-on-year – Cash ISAs subscriptions increased by £26.1bn (37.5%). This compares with a £6.1bn rise (19.7%), for Stocks & Shares ISAs.
While confidence in investing appears to be growing, many savers still value the certainty cash provides, but it’s a little more nuanced than that.
This article isn’t personal advice. ISA and tax rules can change, and benefits depend on your circumstances. If you’re not sure that an action is right for you, ask for financial advice.
What’s driving the ISA surge?
HMRC attributes the Cash ISA jump to a combination of attractive savings rates and rising tax bills on cash held outside tax wrappers. The base interest rate peaked in the 2023-24 and 2024-25 tax years.
As a result, increasing numbers of savers have found themselves breaching the Personal Savings Allowance (PSA) and facing unexpected tax charges.
When the allowance was introduced in 2016, it seemed generous. Previously, tax was automatically taken from your savings interest. Basic-rate taxpayers were now able to earn £1,000 of savings interest tax-free each year, while for higher-rate taxpayers it’s £500. Additional rate taxpayers receive no allowance.
At the time most easy-access accounts paid little more than 1%.
Fast forward to today and the landscape is very different. Savings rates have been significantly higher in recent years, but the PSA has remained unchanged and income tax thresholds have been frozen since April 2022.
As wages, pensions and other forms of income increase, more people are being drawn into higher tax bands, reducing the amount of savings interest they can earn tax-free and increasing the chances of a tax bill.
More than 4.5 million savers are expected to pay tax on their savings income in 2026-27, almost four times the 1.2 million recorded in 2022-23. Against this backdrop, it’s easy to see why the tax shelter offered by a Cash ISA has become increasingly attractive.
Another factor may have been growing speculation about ISA reform. Although the changes were not unveiled until last year’s Autumn Budget, rumours of a Cash ISA cap or potential limits on subscriptions first circulated in early 2025. Some savers may have then decided to make full use of the existing allowances while they still could.
The question now: what happens next?
What to expect from here for Cash ISAs
Further shifts are likely when the next set of ISA savings statistics is released.
From 6 April 2027, under-65s will face a new £12,000 Cash ISA annual limit and will no longer be able to transfer funds from a Stocks & Shares ISA into a Cash ISA.
For all ISA holders, interest earned on cash within a Stocks and Shares ISA will be subject to a 22% tax charge. Investors will also be prevented from holding 100% of a non-Cash ISA in cash-like investments, like money-market funds.
As the rules become more complex, savers and investors will need to assess how the changes affect their financial plans and whether action is needed ahead of the deadline. The result is likely to be increased activity across the ISA space.
While some may be tempted to stuff their Cash ISA before the allowance cut comes into force, financial decisions should be guided by what the money is needed for rather than any tax rule change.
Unless the money is likely to be needed within the next five years, investing offers greater potential for long-term returns than holding cash. While money-market funds can provide investors with a cash-like element within their portfolio. Although, the value of investments will go up and down, so naturally investors could get back less than they invest.
Building a robust emergency fund should remain a priority.
Making full use of the current £20,000 ISA allowance for a Cash ISA, while it remains available, could prove valuable given the tax-free protection it offers. Again, anyone saving towards a shorter-term goal, like a house deposit, wedding or holiday may want to take advantage of the higher allowance now before the rules change in 2027
The outlook for Stocks & Shares ISAs
Stocks and Shares ISAs could also continue to benefit from growing investor engagement.
Under the Government’s Invest for the Future campaign, launched in April with backing from the financial services industry, including Hargreaves Lansdown, the mission is clear – make Britain a nation of retail investors.
With the rather eye-catching ‘Savvy the Squirrel’ ad campaign and tagline, the aim is to encourage more people to invest with confidence. As a company, we are committed to helping clients do exactly that.
Investors holding significant amounts of cash within their Stocks & Shares ISA should also review their arrangements.
Under-65s who value the flexibility of transferring from a Stocks & Shares ISA to a Cash ISA may want to consider their options before that ability is withdrawn in April 2027.
What the latest stats tell us about Junior ISAs and LISAs
It was not only adult ISAs driving the rise in tax-efficient saving.
Around 1.6 million Junior ISA (JISA) accounts were subscribed to in 2024-25, up from 1.37 million the previous year, suggesting more families are looking to give children a financial head start.
Whether the goal is helping with university costs, contributing towards a first home or providing financial security at the start of a career, more parents and grandparents appear to recognise the value of starting early.
Crucially, almost two-thirds of JISA subscriptions went into Stocks and Shares JISAs, highlighting one of the product’s biggest attractions – the opportunity for long-term investing.
Because the money cannot be accessed until the child turns 18, it has years to benefit from compounding and ride out any short-term market volatility. Once the account is opened by a parent or guardian, friends and family can also contribute, turning childhood gifts into a valuable nest egg for the future.
Interest in the Lifetime ISA also remained strong, with more than 1.1 million accounts subscribed to in 2024-25, attracting inflows of £2.8bn.
Since their launch in April 2017, LISAs have offered a route onto the property ladder. It’s also provided a valuable retirement-saving option for the self-employed – who miss out on the benefits of employer pension contributions through automatic enrolment.
This dataset predates the government’s decision to replace the LISA with a new First Time Buyer ISA, removing the retirement savings element. However, a consultation around LISA contributions at the start of 2025 might have prompted some to take advantage of the unique perks that come with this scheme.
While it’s unclear when the new First Time Buyer ISA will roll out, adults aged 18 to 39 can still open and pay into a LISA and receive the government bonus until age 50.
The government effectively adds £1 for every £4 up to the £4,000 annual contribution limit with a withdrawal penalty of 25% if the money is not used for a first time house purchase or retirement. That means opening an account sooner rather than later, even with a token contribution, could make sense for some savers as it preserves today’s rules and provides the flexibility to contribute more in the future when finances allow.
Ultimately, it’s been a bumper year for ISA saving, driven not only by attractive cash rates but also by growing engagement with investing. The positive takeaway is that awareness of the value of the ISA wrapper continues to rise, although that is also a reflection of a tax system where allowances are becoming far less generous.