In 2025, adult cash ISA balances saw a significant jump as savers moved swiftly to secure tax-free returns ahead of changes announced in the Autumn Budget. New analysis from Paragon Bank, based on CACI data for the period from January to December 2025, reveals cash ISA balances increased by over £50 billion while non-ISA balances declined.
The study highlights that the average adult cash ISA balance rose from £15,919 to £17,225 during the year. Meanwhile, average non-ISA balances dipped slightly from £11,919 to £11,909. This shift suggests savers were actively repositioning their funds to maximise tax efficiency before the anticipated reduction in the annual cash ISA allowance.
Overall, total adult cash ISA balances climbed by £57 billion, reaching £436 billion across 25 million accounts by December 2025. The majority of growth was driven by strong demand for fixed-term ISA products, which surged by £35.8 billion to £237.7 billion. Savers appeared eager to lock in competitive rates amid expectations of falling interest rates and a changing tax environment. Instant access ISA balances also increased steadily, rising by £22.4 billion to reach £192.9 billion.
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Conversely, non-ISA balances decreased by £1.8 billion to £845.6 billion across 71 million accounts, largely due to a drop in fixed-term non-ISA holdings as funds migrated into tax-advantaged ISAs.
Andrew Wright, Paragon Bank’s head of savings, commented: “2025 marked a clear shift in saver behaviour, with many individuals taking proactive steps to protect their returns by using tax-efficient savings vehicles. The anticipated Autumn Budget changes prompted many to review their accounts and make the most of the existing cash ISA allowances.
“What stands out is the robust demand for fixed-term ISAs. Savers were not only responding to possible tax changes but also seeking to lock in attractive interest rates before expected rate cuts. This mix of tax planning and rate certainty made fixed-term ISAs especially appealing.”
From April 2027, individuals under 65 will face a new limit of £12,000 annual contributions to cash ISAs. Although the overall ISA allowance remains £20,000, the remaining £8,000 must be invested in other types of ISAs, following the announcements made by Chancellor Rachel Reeves in the Autumn Budget.