Over 33,000 Britons Hold £1m in Savings as Labour Pushes Investment Shift

More than 33,000 people had at least £1million sitting in savings accounts last year, fresh figures suggest.

An estimated 33,700 savers held £1million or more in cash with banks or building societies in 2025.

The estimate is based on the number of people who told HM Revenue & Customs they received annual interest of £50,000 or above.

That level of interest is roughly what someone would earn on £1million in cash if their savings rate was 5 per cent or lower.

There are many reasons why someone may choose to keep such a large sum in cash. Some older savers may have built up money over a lifetime, while others could be holding proceeds from an inheritance, downsizing a property or selling a business.

Labour has been keen to encourage savers to put more money into British stocks and shares rather than leaving it in cash savings, arguing that greater investment would support UK businesses and help lift the economy. The push was a central policy for former chancellor Rachel Reeves.

But the figures, drawn from analysis of HMRC and MSCI World Index data by financial planner Bowmore, underline how difficult it may be to persuade Britons to move money out of savings accounts and into the stock market.

Cash vs stocks

One potential benefit of putting money in stocks and shares, also known as equities, is that over the long term it can offer higher returns than interest on cash savings. 

However, returns on investments can go up and down and unlike with a cash savings account, you can lose some of what you put in.

The general rule is that someone should have an emergency fund in cash of at least three months’ living expenses before they start investing, and that they should not invest any money they might need in the next five years.  

According to Bowmore, the average annual return on equity investments was 12.9 per cent in the 10 years to May 29, 2026.

This compares to an average annual rate of return on a cash Isa of 2.18 per cent. However, rates have vastly improved in the last five years as the Bank of England has increased its base rate and the top accounts currently pay more than 4.5 per cent. 

Money in cash savings risks being eroded by inflation, however. 

If you put your money in a cash bank account that pays 1 per cent interest, you would have 1 per cent more money after a year. 

But if inflation – the rate at which the price of goods and services goes up – is more than 1 per cent, your money would not buy as much as it did before. 

Inflation is currently 2.6 per cent, so if your savings pay less than that in interest you should consider moving them to an account that does. 

To try and get more people to invest in equities the Government is reducing the amount of money most savers can add to tax-free cash Isas from April 2027. 

From April 2027, the annual cash Isa allowance will be reduced to from £20,000 to £12,000. The cash Isa allowance for people aged 65 and over will remain at £20,000.

Mark Incledon, chief executive of Bowmore, said: ‘The sharp rise in the number of people holding seven-figure sums in cash suggests many investors are prioritising safety over long-term growth. 

‘While that can feel comfortable, it comes with a hidden cost – negative real returns after inflation.’

Incledon said many people were nervous about investing because they focused too much on short-term market volatility.  

According to Bowmore, the best one-year fixed cash Isas were offering 5 per cent interest at the start of April 2024. 

This week the top-paying one-year fixed-rate cash Isa deal was with Tandem Bank, offering an interest rate of 4.67 per cent. 

What tax do I pay on cash savings? 

The tax treatment of money held in cash accounts and equities is different. 

Most people can earn some interest from their cash savings without paying tax. Basic rate taxpayers can generate £1,000 in interest in a standard cash savings account without paying any tax. 

Higher rate taxpayers, with taxable income between £50,271 to £125,140 a year, can have £500 in interest from cash accounts without paying tax on it.

Additional rate taxpayers with taxable income over £125,140 have to pay tax on any income generated. 

However, all of these groups get their Isa allowance of £20,000 each year, and they don’t pay interest on the interest that generates. They can also put money in Premium Bonds, a type of savings account from the Government-backed bank NS&I. 

Instead of interest, the Bonds pay out ‘prizes’ to holders that are picked in a monthly draw, and the prizes are tax-free. 

What tax do I pay on investments? 

People investing in equities have to pay capital gains tax on their returns when they cash them out. 

Capital gains tax is levied on profits from assets ranging from shares to second homes, buy-to-let properties and personal possessions.

The rates for stocks and shares gains are 18 per cent for basic rate taxpayers and 24 per cent for those paying higher rates of tax.

These rates were increased in the Autumn 2024 Budget, from 10 per cent and 20 per cent respectively, which brought them into line with the already higher levies on property gains and took effect immediately.

Traditionally, capital gains tax rates are applied at lower rates than income tax, because profits tend to come from people taking a risk, whether an entrepreneurial one or an investment one. 

HMRC data published in January 2026 showed that capital gains tax receipts for 2025 were £13.65billion, down from £14.9billion in 2024. 

It has been reported that Labour could introduce higher rates of capital gains tax under Andy Burnham and the new Chancellor, John Healey. 

Investors also need to pay dividend tax on dividends that they receive. A dividend is basically a reward for holding shares, paid out according to how much of a particular stock you hold.

The tax-free allowance for dividend income is £500. It was slashed in April 2024 from £1,000 in the previous tax year.

If your dividend income is higher than your personal allowance – which takes into account all your other taxable income too – plus your tax-free dividend allowance, you will pay dividend tax according to your income tax band.

On 6 April 2026, dividend tax rates rose from 8.75 per cent to 10.75 per cent for basic rate taxpayers. At the same time, they increased from 33.75 per cent to 35.75 per cent for higher rate taxpayers.

The rate remained at 39.35 per cent for additional rate taxpayers.