Some £95.58 billion was subscribed into adult cash Isas in the tax year 2024-25 – a figure which surged by more than a third compared with the previous year, according to HM Revenue and Customs (HMRC).
In total, the revenue body said around £135.7 billion was subscribed to adult Isas in 2024-25 – a £32.7 billion annual increase.
The £32.7 billion increase was driven by a rise in cash Isa subscriptions, which grew by 37.5% or £26.1 billion.
Stocks and shares Isa subscriptions saw a 19.7% or £6.1 billion annual increase, and lifetime Isa subscriptions had a 20.1% or £472 million rise.
Money held in Isas is ringfenced from tax.
The report said: “This large increase in cash Isa subscriptions can be explained by the Bank of England bank rate and the interest swap rates which were at their highest levels during the 2023-24 and 2024-25 tax years.
“Increased returns to savings are likely to have increased the attractiveness of Isas as a means to reduce savings income tax liabilities.”
At the end of the 2024-25 tax year, the market value of adult Isa holdings stood at £952 billion – an 8.5% increase compared to the value at the end of 2023-24.
In 2024-25, £2.5 billion was subscribed to junior Isas, around 38.3% of which was in cash.
The average subscription in 2024-25 increased to £1,570, marking a 16.6% rise on the 2023-24 figure.
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HMRC said around 23 million people had Isas in 2023-24, increasing from just over 21 million in 2022-23.
The revenue body also said 99,750 account holders withdrew from their lifetime Isa in order to buy a first-time property in 2025-26, an increase of around 13,050 on the previous tax year.
Lifetime Isas help people to save for a first home or their retirement in the same pot.
The average withdrawal value for a house purchase was £15,407 for the tax year 2025-26.
The average value of a lifetime Isa withdrawal for a house purchase has fallen by around £373 since the 2024-25 tax year.
Meanwhile, £118,985,000 in withdrawal charges was also recorded for lifetime Isas in 2025-26, with the average value of an unauthorised withdrawal at £3,088.
Some 154,100 people made unauthorised withdrawals.
People may face unauthorised withdrawal charges if they are taking money out for reasons other than buying a first home or retirement.
Sarah Coles, head of personal finance at AJ Bell, said: “It’s key to make sure the (lifetime Isa) is right for you, and that you don’t end up making unauthorised withdrawals that land you with a punitive charge.
“During the year, £119 million was lost to exit charges. It shows how many people either don’t fully understand the rules or are forced to raid their savings in an emergency.
“The average withdrawal is still only £3,088, so people are cashing in relatively small amounts and facing this horrible penalty.”
At the autumn budget 2025, it was announced that from April 2027, the annual cash Isa allowance would be reduced to £12,000.
The limit for stocks and shares and innovative finance Isas (non-cash Isas) will remain at £20,000, alongside moves to encourage an investment culture.
The cash Isa allowance for people aged 65 and over will remain at £20,000.
Ms Coles said: “We can expect 2025-26 to have been another astonishing year for the cash Isa, as the 2025 budget revealed that the cash Isa allowance will fall to £12,000 a year for those under the age of 65 from April 2027.
“Enthusiasm for stocks and shares Isas was also fired up by impressive investment performance during the year, with global and US stock markets delivering double-digit gains, driven largely by the strength of tech and AI giants.”
Isabella Galliers-Pratt, a senior investment director at Rathbones, said: “The latest HMRC figures show that cash Isas remain firmly embedded in the nation’s savings habits, buoyed by some of the most attractive savings rates seen in years.
“At the same time, the rise in stocks and shares Isa subscriptions is an encouraging sign that more people are engaging with investing.
“It may also reflect growing awareness of the value of the Isa wrapper, particularly as tax allowances elsewhere have become less generous.
“Britain isn’t necessarily facing a savings problem. Millions of people are actively using Isas and taking advantage of the tax benefits they offer.
“The upcoming reduction in the cash Isa allowance from £20,000 to £12,000 for under-65s could help nudge some savers towards investing, but whether it materially changes behaviour remains to be seen.
“Cash remains hugely popular, and our research suggests that confidence and understanding, rather than tax incentives alone, are often the biggest barriers to investing.”
Jason Hollands, managing director of Bestinvest, an investing platform owned by wealth management firm Evelyn Partners, said: “The increasing subscriptions in 2024-25 probably reflect interest rates that have remained relatively high and attractive, as well as soaring stock markets driven by the AI boom, but a tightening tax environment in recent years has doubtless encouraged more people to make more use of Isas.”
