Cash ISA deposits have climbed £2.2bn in the last year, according to the latest Bank of England Money and Credit data.

They have surged in popularity on the back of rumours that Chancellor Rachel Reeves will reform the savings' tax shelters, possibly cutting the annual allowance from £20,000 to £5,000 or less.

The Chancellor has repeatedly hinted that an overhaul of the UK's ISA system is being considered but no firm plans have been disclosed.

Between April and June 2024 there was £19.3bn in cash ISA deposits, the figures show. In the same period this year the figure soared to £21.5bn.

The beginning of the tax year in April is the most popular month for cash Isa deposits and that grew from £11.7bn in April 2024 to £14bn in April this year.

Source: Moneyfactscompare/Bank of England

Adam French, head of news at Moneyfactscompare.co.uk, said: “The sharp rise in cash ISA deposits is a clear sign that rumours of ISA reform are influencing saver behaviour. With talk of slashing the annual cash ISA limit from £20,000 to £4,000, people have been rushing to use their allowances while they still can. It’s a textbook example of policy speculation driving real-world financial decisions.”

He said that after years of frozen tax allowances and rising interest rates pushing more savers into paying tax there was a scramble for tax efficiency, and the prospect of the tax shield shrinking has caused concern.

Mr French said: “An overhaul of the UK's ISA system is still on the cards. If the Government’s aim is to nudge more people towards long-term investment, this reaction shows the challenge ahead.

“You can’t simply cut the cash ISA limit and expect that money to flood into stocks and shares instead. The solution isn’t cutting allowances but greater innovation and shifting focus towards financial education and support.”