Savers stashed £4.2bn in cash ISAs in October, the largest inflow since the end of the tax year in April, and up from £3.3bn in September.

The figures were included in Bank of England statistics released this week.

The increase in contributions stemmed from savers acting ahead of the widely anticipated cut to the cash ISA allowance in the Budget, according to A J Bell.

Laith Khalaf, head of investment analysis at the firm, said: “While cash ISA flows were elevated, one might have expected a bigger dash to use the allowance before the Budget. Perhaps when November’s figures are released we will see another jump in cash ISA contributions. Savers may well have waited until the last minute to fill up their ISAs, and given the hokey-cokey nature of pre-Budget policy briefings to the media, who could blame them?”

He said savers may have been banking on the fact that any change to the cash ISA allowance wouldn’t come in until the end of the tax year at the earliest, which proved to be the case, with the cut now pencilled in for April 2027.

AJ Bell estimates that 21% of cash ISA savers will be affected by the allowance cut announced in last week’s Budget but only 4% will go on to invest in the UK stock market.

Mr Khalaf said: “Plenty of savers probably also aren’t affected by the allowance being cut to £12,000, because it is still sufficient for their annual contributions.”

In 2022/23, the latest tax year for which HMRC has published data, 28% of cash ISA contributions were over £12,500. The data also showed that 26% of cash ISA contributions came from people over the age of 65.

Mr Khalaf said that putting those two numbers together, that suggests somewhere in the region of 21% of cash ISA savers will be affected by the cut.

A survey conducted by AJ Bell earlier this year found that just one in five cash ISA savers would react to a cut to the cash ISA allowance by investing more in the UK stock market, which is the Chancellor’s stated aim by pursuing this policy. Applying that to the 21% of cash ISA savers who might be affected by the cut, Mr Khalaf said that suggests somewhere in the region of 4% of cash ISA savers will be affected by the allowance cut and will then go on to invest more in the UK stock market as a result.

Mr Khalaf said: “This hardly adds up to a dramatic cultural shift in the UK away from cash saving towards investing.”