ISA rush - nervous savers stash record cash into their accounts

British savers are pouring record sums into cash ISAs as global market jitters send shockwaves through investors' confidence, new analysis has revealed.

Investment platform Hargreaves Lansdown reported an unprecedented surge in ISA deposits in the first 20 days of April - a rush driven by mounting fears over stock market volatility and growing uncertainty around future tax hikes.

The turbulence - largely fuelled by fresh changes in US President Donald Trump's trade war - has pushed investors to seek safety in cash, shunning riskier assets in favour of secure, tax-free returns.

Mark Hicks, head of active savings at Hargreaves Lansdown, said that Cash ISAs are booming.

In recent weeks, so-called "swap rates" - key indicators used to set mortgage and savings prices - have dropped sharply on expectations that central banks, including the Bank of England, may slash interest rates sooner than expected to counteract a looming economic slowdown.

But despite that, banks have been forced to keep cash ISA rates attractive, thanks to a flood of new digital banks and fintech challengers shaking up the high street's hold on savers.

And political concerns are also playing their part.

With growing speculation that Labour could raise taxes to plug the hole in the public finances, there has been a flight to make the most of existing ISA allowances

Savers can currently tuck away up to £20,000 a year in ISAs - whether in stocks, cash, or a mix of both - but that figure is now under threat.

Damien Jordan, founder of Financial Interest and Damien Talks Money, suggested to savers: "Choosing a Stocks & Shares ISA is the best way for most people to shield their investments from dividend and capital gains tax.

"Unless you have used your £20,000 annual ISA allowance, there is no reason to use a general investing account over an ISA, as this opens you up to paying tax. Avoid CFD accounts, as over 70% of people lose money using them."

However, Antonia Medlicott, Founder and Managing Director at financial education specialists, Investing Insiders, cationed savers: "With Cash ISAs currently offering up to nearly 5% in interest on deposits and some offering even more with introductory rates, savers can gain peace of mind over the returns they will receive and some great rates."

She continued: "However, most of the top-paying accounts offer 'variable' rates, meaning they can go up and down as the Bank of England rate fluctuates. You will generally get easier access to the cash held in these accounts."

With a Bank of England rate cut expected in May, Antonia points out that savers should look at fixed-rate accounts and long-term ISAs to secure a higher rate before it is too late.

She said: "Fixed rate savings accounts typically require you to lock your money away for a set period of time, but offer certainty over interest rates, no matter what the Bank of England does. If you have spare cash sitting in a low-interest account, moving it into an ISA protects it from tax on interest, dividends, and capital gains."