British households stuffed a record £103bn into tax-efficient individual savings accounts, according to annual figures that underline the strong appetite for the certainty of cash over stock market investments.

Savers opened 15m Isas in the 2023-24 tax year, up from 12.4m the year before and the highest level for 13 years. The spree was driven primarily by a rise in demand for the cash Isas rather than the stocks and shares version.

The number of cash Isas increased by 2.1m to just shy of 10m, with the total squirrelled away in this type of account jumping 67% to almost £70bn, according to HM Revenue and Customs.

Its report said that, during the period, “increased returns to savings are likely to have increased the attractiveness of Isas as a means to reduce savings income tax liabilities”.

This “dash for cash” is likely to have accelerated after the period covered because of speculation that the chancellor, Rachel Reeves, was going to put a cap on cash within an individual’s £20,000-a-year allowance after Labour’s return to power last year.

The plan, which has been paused, sought to encourage Britons to invest in the shares variety. The number of stocks and shares Isas was up 283,000 at 4.1m, with a total of £31bn saved this way.

Rachael Griffin, a tax and financial planning expert at Quilter, said: “These figures don’t yet capture the frenzy of cash Isa ‘stuffing’ in early 2024-25, when rumours swirled that the chancellor might slash the cash Isa allowance. Billions were hurriedly parked into cash.”

Griffin added, however, that the appeal of cash was unlikely to persist much longer, in a climate of gradual rates reductions. “Rates are already starting to drift lower,” she said.

The figures also highlighted the growing interest in lifetime Isas (Lisas). There was a 28% increase in Lisa use in 2023-24, with a record £2.3bn invested in the near 1m accounts.

Lisas allow people to save for their first home or retirement in the same pot. They come with a government bonus, helping to increase nest eggs.

Savers can withdraw money if they are buying a first home worth £450,000 or less, are aged 60 or over, or are terminally ill with fewer than 12 months to live. A withdrawal charge of 25% may apply if someone withdraws cash or assets for any other reason and data for 2024-25 showed savers were hit with more than £100m in penalties.

“The Lisa has an enormously important role in helping people to save for their first home or retirement,” said Helen Morrissey, the head of retirement analysis at Hargreaves Lansdown.

“However, the latest data shows early exit penalties continue to soar, with savers being clobbered with £102m of early exit charges. This is up from £75m the previous year.

“The 25% government bonus for Lisa contributions can really boost people’s savings and help that dream of owning your first home or having a decent retirement feel that bit more real.

“However, the way the early exit penalty works is that it not only takes away the benefit of the government bonus but also a chunk of your own savings.”