Adult cash ISA balances reached a total of £417bn at the end of May, increasing from £410.5bn in April, Paragon Bank has revealed.

The bank’s analysis of CACI data, which compiles the savings data from 40 providers, found that cash ISA balances have grown from a total of £378.7bn at the end of January.

The bank said that this balance increase comes as savers aimed to shield their money from tax, with talk of the Government planning to cut the cash ISA tax limit.

However, a number of outlets, including the BBC, have reported that the Government has "shelved any immediate plans" to make changes to the cash ISA limit, ahead of the Chancellor’s Mansion House speech.

Paragon Bank found that savers favoured fixed-term ISAs during May, with balances increasing from £219.3bn in April to £224.6bn.

Meanwhile, instant access variants also grew from £185bn to £186.5bn.

The bank added that other ISA variants, including notice accounts and regular savers, remained largely unchanged.

Head of savings at Paragon Bank, Andrew Wright, said that ISA performances have been strong for a number of months.

He concluded: "The obvious preference for fixed-term ISAs signals the importance of guaranteed returns and mirrors the behaviour we see at Paragon.

"Our research shows that savers value the certainty and security of cash ISAs and are reluctant to expose their money to the risks associated with equities. We therefore welcome the Chancellor’s decision to take more time to consult with the industry before making any decisions on the future of cash ISAs.

"As cash ISAs are only available to UK residents and are mostly offered by UK ringfenced banks they play a vital role in supporting economic growth, allowing UK banks and building societies to fund home purchases, housing development and SME investment."

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