The amount of money invested into cash Isas in the latest tax year has increased by 50% compared to 2022-2023.
Hargreaves Lansdown research found £8,400 was invested in cash Isas on average in 2022, with this figure rising to £13,000 in 2024.
More people have used the maximum £20,000 allowance during the past three years, with almost 40% of Hargreaves Lansdown clients putting in this amount in the 2024 tax year.
On 6 March, chancellor Jeremy Hunt used the Spring Budget to announce the introduction of a new British Isa.
Hunt unveiled that the British Isa will come in the form of an extra £5,000 tax-free allowance to encourage UK retail investment. The existing Isa allowance is £20,000.
However, following the announcement AJ Bell chief executive Michael Summersgill warned the British Isa idea is “ill-conceived” and will not achieve its objective of encouraging more investment into UK companies.
Hargreaves Lansdown head of active savings Mark Hicks said: “As we approach peak Isa season, the market is becoming more competitive, particularly in variable rate products as Isa providers compete for cash.
“Across our client base we are seeing more and more savers take advantage of their tax-free allowance, especially with Isa rates at historically attractive levels. With the exception of 2023, cash Isa rates are their highest point over the last ten years.”
Previously, during the Autumn Statement in November 2023, Hunt announced that people can make multiple Isa subscriptions of the same type from April 2024.
Hicks added: “The key change as we go into Isa season are the new rules allowing savers to subscribe to multiple cash Isas from 6 April 2024. While this is possible in the current tax year too, because Hargreaves Lansdown allows savers to do this by opening just one account, which they can use to spread their Isa allowance across several accounts, this goes some way to addressing the complexities of Isas in the UK market.”
During the Autumn Statement 2023, the chancellor also announced the addition of long-term asset funds (LTAFs) and open-ended property funds to the innovative finance Isa.