For more than 25 years, UK taxpayers have been saving their
money in Cash ISAs, benefitting from steady returns which are completely
protected from taxation. Over the decades, the annual ISA allowance has
gradually increased, and currently sits at £20,000. This means that every UK
taxpayer can add up to £20,000 per year into an ISA account of their choice –
this could be a Cash ISA, a Stocks and Shares ISA, or an Innovative Finance ISA
(IFISA).
However, the Cash ISA has always been by far the most
popular. According to provisional HMRC statistics, during the financial year
2022-2023, more than 7.8m Cash ISA accounts were active. This compares with
approximately 3.8m Stocks and Shares ISA accounts, and 17,000 IFISA
subscriptions.
In the run up to the Spring Statement, there were rumours
that Chancellor Rachel Reeves planned to cut the £20,000 annual ISA allowance
and reform the Cash ISA, sparking panic amongst savers and investors and
prompting a flurry of ISA allocations. As a result, more than £4.2bn was
deposited in Cash ISAs in March 2025 - a 31 per cent year on year increase[1].