A last-minute surge of savings into Cash ISAs has shielded UK households from a significant income tax bill, following widespread speculation about changes in the Autumn Budget.
The October ISA Rush
New analysis from Coventry Building Society reveals that savers moved a staggering £4.2 billion into Cash ISAs during the month of October. This frantic activity was driven by anticipation of Chancellor Rachel Reeves' first major Budget statement.
The building society calculates that this move has collectively saved Britons more than £330 million in income tax they would have otherwise owed on their savings interest. This brings total cash ISA deposits for 2025 to £45 billion.
Jeremy Cox, Head of Strategy at Coventry Building Society, described the phenomenon. "Speculation created what felt like a second ISA wave in October, with people pouring more than 60 per cent of savings into tax-free accounts," he said. "When people think something might disappear, they rush to grab it and that's exactly what we've seen with cash ISAs this year."
What the Budget Changes Mean for Savers
The speculation proved correct. In her Autumn Budget, Chancellor Rachel Reeves confirmed a major reduction to the annual tax-free allowance for Cash ISAs. From the start of the new tax year, the allowance will be slashed from £20,000 to £12,000.
The remaining £8,000 of allowance has been shifted exclusively to Stocks and Shares ISAs. The government stated this measure aims to encourage more investment in British businesses. There is, however, a key exemption: anyone aged 65 and over will retain the full £20,000 Cash ISA allowance and will not be affected by the reduction.
Understanding Your New ISA Limits
Finance expert Martin Lewis of MoneySavingExpert.com has clarified how the new rules will work in practice. He explained that the overall ISA limit remains £20,000, but the portion that can be placed in cash is now capped.
"Let’s say you put £1,000 in cash, well that reduces the amount you can put in shares by £1,000, because it still has the total of £20,000," Lewis said. "You can do that all the way up from 2027 to £12,000. So you could have £12,000 in cash, and £8,000 in shares. You don’t have to put the money in shares. You could just, from that point, have £12,000 in cash."
He emphasised a crucial detail for existing savers: the new rule only impacts new money paid in. Existing ISA savings are not affected and continue to grow tax-free.
The dramatic October inflow demonstrates the high level of public engagement with personal finance policy, as millions acted to protect their nest eggs from a perceived threat to their tax-efficient savings.
