More than 33,000 Britons have at least £1million in their savings account… but Labour wants them to invest it instead

More than 33,000 people had £1 million or more saved in their savings accounts last year, new data shows.

It is estimated that 33,700 savers will hold at least £1 million in cash in their bank or building society accounts by 2025.

This was based on the number of people declaring interest of at least £50,000 a year to HM Revenue and Customs.

This figure is roughly equivalent to what someone would pay if they had £1 million in cash and earned an interest rate of 5 per cent or less.

There are various reasons why someone might have large amounts of cash; from the elderly sitting on their life savings to those receiving an inheritance or cash by downsizing their home or selling a business.

Labor wants savers to invest more in British stocks and hold less in cash; because this will strengthen businesses and stimulate the economy. This was former chancellor Rachel Reeves’ core policy.

But figures based on financial planner Bowmore’s analysis of HMRC and MSCI World Index data show that wringing money out of Britons’ savings accounts could be an uphill battle.

Cash and stocks

One of the potential benefits of investing money in stocks, also known as stocks, is that they can offer higher returns over the long term than the interest on cash savings.

However, returns on investments may rise and fall, and unlike a cash savings account, you may lose some of what you invest.

The general rule is that a person should have a cash emergency fund sufficient to cover at least three months of living expenses before starting to invest, and should not invest any money they may need within the next five years.

The average annual return on equity investments was 12.9 percent over the 10 years to May 29, 2026, according to Bowmore.

This is compared to the average one-year rate of return. cash jesus 2.18 percent. But rates have improved greatly over the past five years as the Bank of England increased its base rate and senior accounts now pay more than 4.5 per cent.

Risk of erosion of cash savings inflationAgain.

If you put your money in a bank account that pays 1 percent interest, you will have 1 percent more money after a year.

But if inflation (the rate at which prices for goods and services increase) is more than 1 percent, your money won’t be able to buy as much as it used to.

Inflation is currently 2.6 percent, so if your savings are paying less interest than that, you should consider moving them to an account that does.

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

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

Bowmore chief executive Mark Incledon said: ‘The sharp rise in the number of people holding seven-figure sums in cash shows that many investors are prioritizing security over long-term growth.

‘While this feels comfortable, it also comes with a hidden cost: negative real returns after inflation.’

Many people are nervous about investing because they focus too much on short-term market volatility, Incledon said.

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

The highest paying one-year fixed interest cash Isa deal this week 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 on their cash savings without paying taxes. Basic rate taxpayers can generate interest on £1,000 in a standard cash savings account without paying any tax.

High-rate taxpayers with taxable income between £50,271 and £125,140 per year can receive £500 of interest on their cash accounts without paying tax.

Additional rate taxpayers with taxable income over £125,140 must pay tax on any income earned.

However, all of these groups receive the Isa allowance of £20,000 each year and do not pay interest on the interest incurred. They can also deposit money into Premium Bonds, a type of savings account of the government-backed bank NS&I.

The bonds pay ‘rewards’ rather than interest to holders selected in a monthly drawing, and the prizes are tax-free.

How much tax do I pay on investments?

Those who invest in stocks have to pay capital gains tax on their return when they convert it into cash.

Capital gains tax is levied on profits from a variety of assets, from stocks to second homes, rental properties and personal belongings.

Stock and share earnings rates are 18 per cent for basic rate taxpayers and 24 per cent for those paying higher rates.

These rates are increased in autumn 2024 Budgetfrom 10 percent and 20 percent respectively, which put them on par with already high property gains taxes and took effect immediately.

Traditionally, capital gains tax rates apply at lower rates. income taxBecause profits tend to come from people who take risks, whether entrepreneurial or investment.

HMRC data published in January 2026 showed capital gains tax receipts for 2025 at £13.65bn, up from £14.9bn in 2024.

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

Investors also need to pay dividend tax about the dividends they receive. Dividends are basically the reward for holding stocks, paid out based on how much of a particular stock you own.

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

If your dividend income is higher than your personal allowance plus your tax-free dividend allowance, which takes into account all your other taxable income, you’ll pay dividend tax according to your income tax bracket.

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

For additional taxpayers, this rate remained at 39.35 percent.

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