UK savers are moving quickly to secure attractive ISA rates before potential reforms to the £20,000 annual allowance come into effect.
New research from Hargreaves Lansdown reveals an 84% increase in cash ISA deposits in April 2025 compared to the same month last year, as people look to “lock in” current deals before anticipated changes are introduced by Chancellor Rachel Reeves.
Why Savers Are Acting Now
The Government recently confirmed plans to reform the structure of tax-free savings accounts, aiming to “get the balance right” between cash and equities.
At the same time, fixed-rate savings products have become more attractive. According to Moneyfacts data:
- The average longer-term fixed bond rate has climbed to 4.02%.
- The average longer-term fixed ISA rate now stands at 4.01%.
In addition, product choice has surged, with a record 2,191 savings deals now available, the highest number tracked by Moneyfacts since 2007.
Cash ISAs in particular are thriving, with 611 products currently available across 151 savings providers.
Fixed Rates vs Easy Access Accounts
While fixed-rate deals are climbing, easy access account rates have dropped to 2.76%, the lowest since mid-2023.
However, easy access ISAs have slightly bucked the trend, with the average rate rising to 3.03%.
The gap between notice accounts and easy access rates remains significant, offering savers the opportunity to earn an additional 1.04% on average by opting for notice accounts.
Rachel Springall, a finance expert at Moneyfacts, highlighted:
“Savers debating whether to lock into a fixed rate bond or ISA over the longer-term may find it encouraging that average returns have breached 4% for the first time in over six months.”
She also noted that the incentive to fix for longer has improved, as the rate gap between one-year and longer-term bonds narrows.
ISAs Remain Popular
Cash ISAs remain a firm favourite, with £3.5 billion deposited in February alone according to the Bank of England.
The appeal of ISAs continues to grow, particularly as an estimated 2.5 million consumers are expected to pay higher-rate tax (40%) in the current tax year, according to the Office for Budget Responsibility (OBR).
Rachel Springall added a note of caution:
“Cash ISA rates often fall after the end-of-tax-year rush, so it’s wise for savers to act early to secure the best deals available.”
She also urged savers to shop around and stay proactive in reviewing their savings options, especially in a market where easy-access accounts are vulnerable to frequent rate cuts.
How Accounting People Can Help
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