UK savers stuff £2 billion extra away ahead of rumoured cash ISA reform

British savers stashed more than £2 billion more into cash ISAs over the last three months compared to the year before, data from the Bank of England shows.

A reduction to the cash ISA limit was widely rumoured to be on the cards in the run-up to chancellor Rachel Reeves’s Mansion House speech on 15 July. Advocates of the policy hoped that cutting the cash ISA limit, perhaps to as low as £4,000, could incentivise Brits to invest more into stocks and shares instead, in an effort to revive London’s struggling stock market.

Reeves announced that she wants to boost the UK’s investing culture at the speech, but no reforms to the cash ISA limit were announced, as had been expected.

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Savers deposited £21.5 billion into cash ISAs in the three months from April to June 2025 – £2.2 billion more than during the equivalent period the previous year – according to data from the Bank of England’s (BoE) latest Money and Credit report. It suggests Brits were concerned about the potential reforms.

“With talk of slashing the annual cash ISA limit from £20,000 to £4,000, people have been rushing to use their allowances while they still can,” said Adam French, head of news at Moneyfactscompare.co.uk.

How much did UK savers put into cash ISAs?

The first three months of this financial year saw a marked increase in cash ISA deposits, with most of the uplift on the previous year coming in the first month.

Savers deposited £14 billion in cash ISAs this April – which unsurprisingly sees the highest level of contributions as ISA early birds get ahead in the new tax year – up from £11.7 billion in April 2024.

^{Source: Moneyfacts.co.uk, Bank of England}

May 2025 actually saw a slight fall to £3.9 billion from £4.2 billion in 2024, but June 2025 saw an uptick to £3.6 billion from £3.4 billion.

More broadly, household deposits with banks and building societies increased by £7.8 billion in June compared to May, according to the BoE’s Money and Credit report.

“More savers are recognising the importance of protecting their cash pots from tax,” said Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners. “While June’s uncertainty in the domestic and global economy may have encouraged some savers to top up their savings to protect their finances, others may have been trying to capitalise on higher savings rates while they were still around.”

Could the cash ISA limit be lowered in future?

While the rumoured cash ISA cut has been delayed for now, it may not be off the cards over the longer term, with Reeves suggesting that she wants to spend longer consulting with the industry before making any changes.

“An overhaul of the UK's ISA system is still on the cards,” said French. “If the Government’s aim is to nudge more people towards long-term investment, this reaction shows the challenge ahead.

“You can’t simply cut the cash ISA limit and expect that money to flood into stocks and shares instead,” French added. “The solution isn’t cutting allowances but greater innovation and shifting focus towards financial education and support.”

There are contrasting views on the role of cash ISAs and how (as well as if) they should be reformed to encourage investment.

“Cash ISAs are popular,” said Andrew Gall, head of savings and economics at the Building Societies Association in Interest, Moneyfacts’ magazine. “They are used by savers for a broad range of practical purposes, from building financial resilience to saving for a first home to managing finances in retirement.”

Gall advocates maintaining the cash ISA limit and launching a public awareness campaign to help beginner investors get started.

But Richard Stone, CEO of the Association of Investment Companies, thinks cash ISAs and stocks and shares ISAs should be merged, with ISAs only offering cash options having lower contribution limits. He also agrees that a healthier investing culture should be fostered, with the help of a public education campaign.