- Around 33,700 people held at least £1 million in cash savings during 2025, according to new analysis.
- Despite equities returning an average 12.9 per cent annually over the past decade, many wealthy savers continue to favour cash.
- The Government is cutting the cash ISA allowance to £12,000 from April 2027 for most savers in a bid to encourage investment.
Thousands of people across the UK are choosing to keep more than £1 million in cash savings, even as the Government steps up efforts to encourage investment in stocks and shares.
Fresh analysis by financial planner Bowmore estimates that 33,700 people held at least £1 million in bank or building society accounts during 2025. The estimate is based on HM Revenue & Customs data showing the number of people who declared £50,000 or more in annual savings interest — roughly the amount someone would earn by keeping £1 million in cash at an interest rate of up to 5 per cent.
The figures highlight a challenge for ministers, who want households to move more of their savings into investments to support British businesses and economic growth. The policy was first championed under former Chancellor Rachel Reeves and remains part of the Government's broader plan to channel more private wealth into UK companies.
Safety first still outweighs higher returns
There are several reasons why someone may hold such large sums in cash. Some are retirees who have built up savings over decades, while others may have received an inheritance, sold a business or released equity by downsizing their home.
For many, the appeal is certainty. Cash savings provide security and predictable returns, unlike investments, which can rise or fall in value. While shares have historically delivered stronger long-term performance, they also carry the risk of losses.
Bowmore's analysis found that equity investments returned an average of 12.9 per cent a year over the 10 years to May 29, 2026. By comparison, the average annual return on a cash ISA over the same period was 2.18 per cent.
The gap has narrowed in recent years as higher Bank of England interest rates pushed savings rates upwards. The best one-year fixed cash ISA rates reached 5 per cent in April 2024, while the leading one-year fixed deal this week offered 4.67 per cent.
Financial advisers generally recommend keeping an emergency fund worth at least three months' living expenses in cash before investing. Money that may be needed within the next five years is also usually considered better suited to cash rather than stock market investments.
Inflation remains another consideration. UK inflation currently stands at 2.6 per cent, meaning savings earning less than that effectively lose purchasing power over time.
Mark Incledon, chief executive of Bowmore, reportedly said the growing number of people holding seven-figure cash balances suggests many wealthy savers continue to prioritise security over long-term growth. He added that while cash can feel safe, inflation can steadily reduce its real value over time. Incledon also reportedly said many people remain hesitant to invest because they focus too heavily on short-term market swings rather than long-term returns.
ISA changes and tax rules reshape the savings debate
The Government is also reshaping how people save through changes to ISA rules. From April 2027, the annual cash ISA allowance will fall from £20,000 to £12,000 for most savers. However, those aged 65 and above will continue to be able to save £20,000 a year in cash ISAs.
Interest earned inside an ISA remains tax free, making it one of the most popular savings products in the UK.
Outside an ISA, most people can still earn some savings interest before paying tax. Basic-rate taxpayers have a £1,000 Personal Savings Allowance, while higher-rate taxpayers can earn £500 in savings interest tax free. Additional-rate taxpayers do not receive a Personal Savings Allowance.
Savers can also use NS&I Premium Bonds, where returns come as tax-free prize winnings instead of regular interest.
Investing comes with its own tax considerations. Profits made when selling shares may be subject to capital gains tax, which currently stands at 18 per cent for basic-rate taxpayers and 24 per cent for higher-rate taxpayers. Those rates were increased in the Autumn 2024 Budget.
HMRC figures published in January 2026 showed capital gains tax receipts totalled £13.65 billion in 2025, down from £14.9 billion a year earlier.
Dividend income is also taxed once it exceeds the annual £500 dividend allowance. Since April 6, 2026, dividend tax rates have risen to 10.75 per cent for basic-rate taxpayers and 35.75 per cent for higher-rate taxpayers, while the 39.35 per cent rate for additional-rate taxpayers remains unchanged.
Reports have suggested the Government could consider further changes to capital gains tax under Prime Minister Andy Burnham and Chancellor John Healey, although no such measures have been announced.
While policymakers hope more people will move into investing, the latest figures suggest many wealthy savers still see cash as the safer option, even if it may not deliver the strongest returns over the long run.
