A total of 44p in every pound stashed away by savers is now put in a cash Isa, data shows, as Chancellor Rachel Reeves considers hacking back the amount savers can put in the tax-free accounts.

In the first six months of the year, savers poured £42.5billion into the tax-free accounts, analysis from investment firm Janus Henderson Investment Trusts shows.

This represents 44 per cent of the estimated £96billion saved by British households during that period.

Savers redirected money they may have otherwise put into easy-access or fixed-rate accounts for fear of the cash Isa allowance being curbed in the upcoming Budget, according to the city fund managers.

The Chancellor is considering cutting the cash Isa allowance to £10,000 from its current £20,000 level, according to reports, in a bid to encourage people to invest in stocks and shares instead.

This has been met with opposition, with the Treasury Select Committee urging the Chancellor to reconsider the plans. Writing in This is Money, Shadow Chancellor Sir Mel Stride said the plans were a 'tax raid' by another name.

Cash Isa rush: Money in tax-free cash accounts now account for almost half of all UK savings

Dan Howe, head of investment trusts at Janus Henderson, said savers were taking money out of other savings accounts and putting it in cash Isas, for fear the allowance would be cut.

'Fears that Rachel Reeves will reduce the amount available for cash Isas means that savers are draining their other savings accounts to use up their Isa allowance.'

Savings interest earned on money that isn't in an Isa is taxed over £1,000 for basic rate taxpayers and over £500 for higher rate taxpayers. Additional rate taxpayers pay tax on all their savings interest outside an Isa.

A cash Isa raid was also rumoured in July, but did not happen.

It is part of a plan by Reeves to encourage savers to divert billions of pounds of cash savings into the stock market and boost Britain's flagging economy.

It comes as she is clambering to plug a hole in the nation's finances which could be as much as £30billion.

Cash Isas have received 50 per cent more savings over the last 10 years than their stocks and shares counterparts, according to Janus Henderson.

Savers have funnelled more money into cash Isas than stocks and shares Isas in every tax year since at least 2008-09, except for 2021-22 when the pandemic saw more people turning to investing.

Cash or stocks - which makes better returns?

Janus Henderson figures show that savers could have made better returns over this time if they had invested money in the stock market rather than keeping it in cash.

However, investing comes with risk and is only recommended if you don't need to access the money for at least five years, to enable you to ride out market ups and downs.

Cash Isa savers who maxed out their allowance over the last 10 years would have accrued £14,833 of tax-free interest in that time, on £198,813 of Isa contributions since April 2015. Their total pot would have risen to £213,646, Janus Henderson said.

This assumes an interest rate over the ten years of 1.1 per cent, as published by the Bank of England for a variable rate cash Isa - calculated monthly.

Taking the impact of inflation into account on the contributions and interest, they would have lost £23,210.

Big day: Chancellor Rachel Reeves will set out her Budget on 26 November

Those who took on more risk and invested in stocks and shares have fared better over this time. Between April 2015 and August 2025, a saver maxing out their stocks shares Isa could have seen the total £198,813 they paid in balloon to £261,830 if they had tracked the FTSE all share index, with dividends reinvested.

This is based on the FTSE all share index returning 6.2 per cent per year over the 10 years.

This would have led to a return of £63,016, after allowing for fees. Stripping out inflation, stocks and shares investors would be £36,824 better off than if they had saved in a cash Isa, Janus Henderson said.

Putting the money into a closed-ended investment trust, would have seen an investor stand to make yet better returns.

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For example, Bankers - a diversified portfolio of large global companies - would have generated an Isa pot of £303,671 today.

A pot invested in the North American Income Trust would now be worth £308,494, while one invested in the European Smaller Companies Trust would now be worth £286,416.

Bankers and North American Income Trust had an average share price total return of 10.4 per cent per year over the 10 years, while Europe Smaller Companies averaged 11.7 per cent per year over the same period.

Howe said: 'Cash savings have failed to provide a worthy return over the long term, and the erosive effect of inflation diminishes that return further still.

'The benefit of the cash Isa account tax break is largely swallowed up by the extra-low rates offered, typically around half a percentage point lower than savings accounts outside the tax wrapper.'

However, advocates of keeping the cash Isa limit say it is a vital tool for low-risk saving and scrapping it won't lead to investment in stocks and shares instead.

One of the most appealing elements of a cash Isa to savers is that they are generally considered a lower-risk savings option.

Like other accounts, they are protected by the Financial Services Compensation Scheme up to £85,000.

Cash Isas are a reliable vehicle for savers looking to set aside some money without taking too much risk, for example those who need a deposit for a home or another short-term savings goal.

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Almost HALF of money saved is put in a cash Isa as Reeves mulls cut