Millions of households across the United Kingdom have significantly increased their cash ISA holdings, amassing a collective £207 billion by the end of September 2025. This marks a substantial 14% increase compared to the same period the previous year, according to new data.
Precautionary Savings Buffer Against Uncertainty
The latest Household Finance Review from industry body UK Finance reveals that individuals are continuing to build substantial "precautionary buffers" due to an uncertain economic climate. This trend persists even as savings rates have begun to fall across the market.
Eric Leenders, Managing Director of Personal Finance at UK Finance, stated: "Savings growth has moderated but remains strong by historic standards, with households continuing to build precautionary buffers against an uncertain economic backdrop ahead of the autumn Budget."
In addition to the cash ISA boom, the report noted that a further £295 billion was held in notice savings accounts, which saw a 10% annual rise.
Autumn Budget Brings Future Changes to ISA Limits
The figures emerged following the Labour Party's Autumn Budget in November 2025, which provided clarity on future Individual Savings Account rules. After months of speculation, the government confirmed that the annual adult cash ISA subscription limit will be reduced to £12,000 from April 2027.
However, the overall annual allowance for all adult ISAs will stay at £20,000. This change is expected to encourage savers who reach the new cash ISA ceiling to consider investing the remainder in stocks and shares ISAs.
Savers aged 65 and over will be exempt from this reduction, retaining the full £20,000 annual cash ISA allowance.
New Rules to Prevent Rule-Bending
The Budget also introduced fresh regulations designed to stop savers from circumventing the new £12,000 cash limit. These measures include:
- Levies on interest earned from cash held within stocks and shares ISAs.
- Assessments to determine if funds are being parked in "cash-like" accounts to avoid the new threshold.
UK Finance's report suggests that while household savings are likely to keep growing through the rest of the year, a further decline in savings rates or slower wage growth could temper this expansion.
The strategic shift in savings behaviour, prioritising accessible cash reserves, underscores a widespread caution as households navigate the current financial landscape.
