This surge represents the highest annual inflow in a decade, vastly outstripping the activity seen since the allowance rose to £20,000 in 2017. The trend reached a fever pitch in December, which saw £5.2 billion in deposits – the highest ever recorded for a month outside the typical tax year-end rush. This level of engagement stands in stark contrast to 2022, when the market actually experienced net outflows.

Laura Suter, director of personal finance at AJ Bell attributes this resurgence to a combination of rising interest rates and frozen tax thresholds. As the personal savings allowance has remained stagnant for a decade, more individuals are facing tax liabilities on their interest. Furthermore, the freezing of income tax bands has pushed many savers into higher brackets, subsequently reducing or eliminating their tax-free savings limits. As a result, the tax-sheltered environment of the Cash ISA has transitioned from a niche product to an essential financial tool, with nearly 90% of the last decade’s total inflows occurring within just the past three years.

Ms Suter explained: “Speculation about the future of Cash ISAs ahead of last year’s Budget also boosted inflows.

“There’s no doubt that the rumours around Cash ISAs being cut and the eventual decision to slash the Cash ISA allowance for under 65s in last year’s Budget will have meant more people rushed to use the accounts, despite the fact the cut won’t happen until April 2027.

“Inflows to Cash ISAs in December 2025 were 47% higher than the same month a year earlier, showing the Reeves effect on the accounts. The £5.2 billion paid into Cash ISAs in December last year is the highest non-tax year end month for inflows ever, closely followed by November’s inflows.”

She concluded: “Cash ISAs’ popularity isn’t likely to go anywhere in 2026, as more people will stuff the accounts before the allowance is cut in 14 months’ time. AJ Bell research from last year found that if the Cash ISA allowance was cut, half of savers would just put their money in a taxable savings account, rather than investing it – running counter to the government’s original aim with its policy. It means lots of savers will be looking to maximise their ISA savings this year to reduce their future tax bill.”