ISA Market Reaches Record High as New Rules Transform UK Savings Landscape 2025

Record Growth in ISA Options Amid Changing Landscape

The Individual Savings Account (ISA) market has reached a significant milestone as the number of cash ISAs has risen to a record high of 662 at the start of September, marking the eighth consecutive month of growth in available accounts.

Recent regulatory changes have enhanced flexibility for savers, allowing them to open ISAs with different providers and mix various account types, including Easy Access Cash ISAs, Notice Cash ISAs, and limited access options.

Current Market Conditions and Rates

While the market has seen some downward pressure, with the average easy access ISA rate falling to 2.82% and the average one-year fixed ISA rate dropping to 3.91%, many leading rates have remained stable, offering savers an opportunity to secure competitive returns.

Currently, Principality BS leads the market with a 4.40% AER yearly rate (including a 1.70% AER bonus for 12 months) on their Online Bonus 5 Access ISA. This account requires a minimum deposit of £1 and allows up to five withdrawals per tax year, with flexible ISA rules applying to withdrawals.

New Regulatory Requirements

Starting from 6 April 2025, significant changes will be implemented requiring new ISA accounts to include National Insurance numbers, marking a departure from previous requirements. This new regulation will affect both new ISA applications and requests to restart subscriptions to existing ISAs.

These changes come at a crucial time as the Personal Savings Allowance continues to affect tax implications, with basic-rate taxpayers allowed £1,000 in tax-free savings interest, reduced to £500 for higher-rate taxpayers and £0 for additional-rate taxpayers. With over seven million people expected to pay higher-rate income tax in 2025/26, ISAs have become increasingly important as a tax-efficient savings vehicle.

Future Outlook

Earlier speculation about potential restrictions to cash ISA deposits was addressed in July 2025, when plans to lower the cash ISA allowance were shelved following industry backlash. The Building Societies Association argued that such reforms would discourage savers without affecting their risk appetite or investment preferences.

The current £20,000 annual ISA allowance remains in place for the 2025/26 tax year, with accounts available to those aged 18 or over, while Lifetime ISA applicants must be under 40.