British households put a record £103bn into individual savings accounts (Isas) last year, as savers sought the security of cash over riskier stock market investments.
New figures from HM Revenue and Customs (HMRC) show that 15 million Isas were opened in the 2023–24 tax year, up from 12.4 million the year before – the highest number in 13 years. The surge was driven largely by cash Isas, which rose by 2.1 million to nearly 10 million accounts. Deposits into cash Isas leapt 67% to almost £70bn.
Rise in demand for cash security
HMRC said higher interest rates had made savings more attractive, with many households keen to shelter returns from tax. The appetite for cash intensified after speculation that Chancellor Rachel Reeves might cap the amount that could be saved in cash within the annual £20,000 Isa allowance.
Although the plan has since been paused, rumours sparked what financial experts called a “frenzy of cash stuffing”.
“The figures don’t even capture the early-2024 dash when people rushed to fill cash Isas before potential limits,” said Rachael Griffin, a tax and financial planning expert at Quilter. “Billions were hurriedly parked into cash.”
Griffin added, however, that the trend may not last. “Rates are already drifting lower, so the appeal of cash may fade,” she said.
Stocks and shares Isas still growing
Despite the rush into cash, interest in stocks and shares Isas also rose. The number of accounts climbed by 283,000 to 4.1 million, with £31bn invested. These products were designed to channel more household wealth into companies listed on UK markets.
The government has been keen to encourage savers to use stocks and shares Isas to support investment in British businesses, though concerns about volatility and short-term risks keep many households cautious.
Lifetime Isa boom – but penalties mount
The figures also revealed growing enthusiasm for lifetime Isas (Lisas), which allow people to save for their first home or retirement with a government bonus. Nearly 1 million people now hold a Lisa, with a record £2.3bn invested in 2023–24 – a 28% rise on the previous year.
But the popularity of the product has come with a warning. Data shows savers paid more than £100m in penalties for early withdrawals in 2024–25, up from £75m the year before.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said while Lisas can give a “huge boost” to savings, the penalties remain punishing.
“The 25% charge not only wipes out the government bonus but also eats into people’s own savings,” she said. “It’s vital people understand the restrictions before committing their money.”
Savers balancing caution and risk
The record Isa inflows underline households’ preference for certainty in an uncertain economy. With interest rates expected to fall further, analysts believe the balance between cash and investment products may shift again in the years ahead.
For now, the Isa remains one of the most popular ways for Britons to protect their savings from tax – and the latest surge shows just how much value people place on that security.
