- Data obtained from HMRC by AJ Bell under a Freedom of Information (FOI) request reveals the tax relief on Cash ISAs hit £2.79 billion in 2024/25
- That’s more than 13 times the £210 million saved six years prior, and more than double the tax saved a year earlier
- The tax relief on Stocks and Shares ISAs hit £6.96 billion in 2024/25 - up 95% in six years from £3.57 billion in 2018/19
- More people have been pushed into paying higher rates of tax over this period, thanks to cuts to the dividend and capital gains tax allowances, a rise in the rates of both, and frozen income tax thresholds
Sarah Coles, head of personal finance at AJ Bell, comments:
“ISAs have never been more valuable to savers and investors. As tax hikes have squeezed people ever-harder, the protection offered by ISAs has become increasingly important, helping us save billions of pounds more in tax every year.
“In Stocks and Shares ISAs, investors are protected from both tax on dividends and capital gains tax on investment growth. They saved a collective £6.96 billion on tax in Stocks and Shares ISAs in 2024/25. That’s up 95% in six years. The dividend tax saving makes up the lion’s share, at £5.78 billion, more than doubling over the same period.
“In Cash ISAs, savers are protected from income tax on savings interest. They saved £2.79 billion, which is more than double the amount saved a year earlier (£1.31 billion) and an impressive 13 times as much as was saved six years prior.
"The bumper rates on Cash ISAs during the 2024/25 tax year played a key role. Back in the age of super-low rates, while the economy wrestled with the pandemic, savers were barely making anything on their savings – and in 2021/22 they saved just £75 million in tax on their savings interest. The hiking of rates in recent years has seen that soar.
“It has also been a strong period for the markets, creating capital gains for investors that would be heavily taxed if held outside a Stocks and Shares ISA. A typical global index tracker fund has grown by 111% since April 2018 (source: FE, Fidelity Index World Inc).
“But that’s not the full picture: the taxman’s grip on our investments has also been tightening. Capital gains tax rose in October 2024, and dividend tax rates have risen in 2022 and then again in 2026. If that wasn’t harsh enough, the allowances have been slashed too, with the capital gains tax allowance dropping from £12,300 in 2022/23 to just £3,000 in 2024/25 – and the dividend allowance falling from £2,000 to £500 over the same period. Holding investments within the ISA wrapper protects you from both taxes.
“Frozen income tax thresholds mean over time, pay rises have pushed taxpayers over thresholds. When you cross into a higher rate tax band your personal savings allowance halves and when you move into paying additional rate tax, it disappears altogether. Once you bust the allowances, you pay a higher rate of tax too. It’s one reason why the tax relief offered by the Cash ISA has been increasingly valuable in recent years.
“Crossing a threshold also means you can face a higher rate of tax on dividends and capital gains tax. This ratchets up for capital gains tax when you cross the threshold into higher rate tax. It’s hiked for dividend tax when you move into paying higher rate tax and then again when you move into additional rate tax territory.
“There has been a great deal of focus on the Cash ISA recently, because the government’s plans to slash the annual allowance for under 65s from next April have persuaded people to stuff their Cash ISAs while they can. It’s hardly surprising: these figures lay bare the tax saving on offer, and demonstrate how painful the lower allowance could make saving in the coming years.
“However, these figures also demonstrate how vital it is not to overlook the tax-saving power of the Stocks and Shares ISA too. If you’re considering the best use of your allowance, it’s worth taking time to consider the right balance of investments and savings for your portfolio.”
Tax relief on ISAs (in £ millions)
Source: FOI submitted by AJ Bell to HMRC. Responses received on 5 June 2026 and 1 July 2026.
