More change for ISA savers ready to move

By the Editorial Team · Wednesday, September 30, 2026

Cash ISA deposits surged to £4.7 billion in August as savers rushed to benefit from the current £20,000 annual allowance before it is reduced to £12,000 for those under 65 in April 2027. This shift highlights growing interest in tax-free savings and better interest rates, as many seek to avoid lower returns and potential future tax hikes.

Cash ISA savers are accelerating their deposits ahead of a planned reduction in the annual allowance for younger account holders next year, according to recent Bank of England data. Deposits with banks and building societies reached £4.7 billion in August, up from £3.8 billion in July, while £4.4 billion flowed into Individual Savings Accounts (ISAs) over the same period.

The government will lower the annual Cash ISA limit from £20,000 to £12,000 for individuals under 65 starting April 6, 2027, although the overall ISA allowance will remain at £20,000. Those aged 65 and over will retain the full £20,000 Cash ISA allowance. The Stocks and Shares ISA limit will also stay unchanged at £20,000.

Alice Haine, head of personal finance at Hargreaves Lansdown, said the increase in deposits reflected savers’ efforts to maximize use of the current higher allowance before the reduction takes effect. She noted that existing frozen tax thresholds and the Personal Savings Allowance were already motivating many to move funds into tax-free accounts.

“As savings rates rise again, savers can also benefit from more competitive Cash ISA deals, with some of the best rates above the 5% mark,” Haine added. However, she cautioned that some offers include temporary bonuses that expire after 12 months, advising savers to carefully review terms and regularly reassess their accounts.

Additional data from the savings app Spring indicates that £327 billion is held in savings accounts offering interest rates of 1.5% or less. Of this, £72.6 billion is distributed across more than 365,000 accounts with balances exceeding £100,000. Derek Sprawling, Spring’s head of money, emphasized that “too much of the nation’s money is earning far less than it could.”

Financial experts suggest that moving cash into better-performing accounts could boost returns. Using a Cash ISA can offer tax-free interest and protect savers from future tax increases, providing a degree of security amid ongoing fiscal uncertainties.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.