Comparison Guide · Updated May 2026
All 5 ISA Types Side-by-Side: Complete 2026/27 Comparison
There are five types of ISA available to UK savers in 2026/27: Cash ISA, Stocks & Shares ISA, Innovative Finance ISA, Lifetime ISA and Junior ISA. The annual adult allowance is £20,000 (£4,000 of which can go into a Lifetime ISA), plus a separate £9,000 Junior ISA allowance per child. All five share one core benefit: no income tax, Capital Gains Tax or dividend tax on returns inside the wrapper — ever. But their risk profiles, withdrawal rules, government bonuses and target uses differ sharply. This guide puts every ISA type in one place so you can choose the right wrapper — or combination of wrappers — for your money.
The Five ISA Types at a Glance
| Feature | Cash ISA | S&S ISA | IFISA | Lifetime ISA | Junior ISA |
|---|---|---|---|---|---|
| Annual allowance | £20,000 | £20,000 | £20,000 | £4,000 (counts to £20k) | £9,000 (separate) |
| Eligible ages | 18+ | 18+ | 18+ | 18–39 to open | Under 18 (parent opens) |
| Government bonus | None | None | None | 25% on contributions | None |
| Risk level | Low | Medium–High | Medium–High (P2P) | Low–High (Cash or S&S) | Medium–High (S&S) / Low (Cash) |
| Tax on interest/gains | No | No | No | No | No |
| Withdrawal penalty | None | None | None | 25% (claws back bonus + more) | Cannot access until 18 |
| Transfer to other ISA | Yes | Yes | Yes | To LISA only | No (rolls to adult ISA at 18) |
| FSCS protected | Yes (£85k) | Depends on assets | No | Depends on type | Yes (Cash JISA, £85k) |
| Best for | Emergency fund, 1–5yr saving | Long-term wealth (10yr+) | Higher yield (accept risk) | FTB deposit or retirement | Child's future fund |
Sources: HMRC ISA statistics 2026, FCA register, FSCS.org.uk. LISA property purchase limit: £450,000. Junior ISA allowance separate from adult allowance.
Cash ISA: The Safe Harbour
A Cash ISA works like a savings account but with one crucial difference: all interest earned inside the wrapper is completely free from income tax. For basic-rate taxpayers, this benefit is modest given the Personal Savings Allowance (PSA) of £1,000/year — you would need roughly £22,000 in a 4.5% savings account before the PSA is exhausted and tax becomes payable. For higher-rate taxpayers (PSA £500) and additional-rate taxpayers (no PSA at all), Cash ISAs offer immediate value from the first pound of interest.
Cash ISA rates in 2026 are competitive following the Bank of England rate cycle. Easy-access Cash ISAs are available at 4.0–4.5% AER from leading providers, while fixed-rate Cash ISAs for 1–2 years reach 4.6–4.9%. Cash ISAs are protected by the FSCS up to £85,000 per authorised provider — the same as a standard savings account.
Cash ISAs are ideal for: emergency funds (accessible, no penalty), short-to-medium-term savings goals (1–5 years), higher-rate or additional-rate taxpayers who have exhausted their PSA, and risk-averse savers who want certainty of capital.
Stocks & Shares ISA: Long-Term Wealth Building
A Stocks & Shares ISA lets you invest in shares, funds, bonds, investment trusts, ETFs and other qualifying investments without paying Capital Gains Tax on gains or income tax on dividends — inside the wrapper. The CGT annual exempt amount is now just £3,000 (2026/27), so investors with meaningful portfolios outside an ISA face real tax exposure; the S&S ISA shelters unlimited growth from that point forward.
Cash ISA vs S&S ISA: 20-Year Growth Comparison
| Scenario | Cash ISA (4.5%/yr) | S&S ISA (7%/yr) |
|---|---|---|
| Initial investment | £10,000 | £10,000 |
| Value after 5 years | £12,462 | £14,026 |
| Value after 10 years | £15,530 | £19,672 |
| Value after 20 years | £24,117 | £38,697 |
| Gain over 20 years | £14,117 | £28,697 |
| Difference (S&S ahead) | — | +£14,580 |
Illustrative only. 4.5% cash rate assumed constant; 7% S&S return is a long-run MSCI World average approximation. Past performance is not a guide to future returns. Capital is at risk in a Stocks & Shares ISA.
The S&S ISA is best suited to investors with a time horizon of at least 10 years, who understand that markets fluctuate and that their capital could fall as well as rise in any given year. Over the long run, the evidence strongly favours equities — the 20-year illustration above shows a potential £14,580 advantage over cash at assumed rates. But that gap could be much smaller or larger depending on actual market returns.
Innovative Finance ISA (IFISA): Higher Yield, Higher Risk
The Innovative Finance ISA wraps peer-to-peer (P2P) lending in a tax-free envelope. Platforms such as Zopa and Funding Circle allow you to lend money directly to individuals or businesses, earning interest (typically targeting 6–10% per annum) within the ISA wrapper — tax-free.
Critical: IFISAs are NOT covered by the FSCS
Unlike Cash ISAs and most S&S ISAs, the Innovative Finance ISA does not benefit from FSCS protection for investment losses. If borrowers default or the platform fails, you can lose some or all of your capital. The FCA regulates P2P platforms, but regulation is not a guarantee against loss. Post-pandemic default rates hit many investors hard — several platforms including Lendy and RateSetter (now Raisin) exited the market. Only invest in an IFISA capital you can afford to lose entirely.
IFISAs are appropriate for experienced investors who: understand credit risk and have researched the platform's default history; want yields that cannot be matched by cash savings; are comfortable with illiquidity (some P2P loans have lock-up periods of 1–5 years); and hold IFISAs as a small part of a diversified portfolio, not their primary savings vehicle.
Lifetime ISA: The Government Bonus ISA
The Lifetime ISA is unique among ISA types: the government adds a 25% bonus on every pound you contribute, up to £4,000 per year. That is up to £1,000 free money per year for qualifying savers. Over a 10-year saving period, the bonus alone could reach £10,000.
LISA Deep-Dive: Numbers That Matter
| Annual contribution limit | £4,000 |
| Government bonus (25%) | £1,000/year |
| Lifetime bonus cap | Uncapped (£1,000/year until age 50) |
| Property purchase price limit (FTB) | £450,000 |
| Minimum holding period before FTB use | 12 months from first subscription |
| Qualifying withdrawal: retirement | Age 60+ |
| Qualifying withdrawal: terminal illness | Any age |
| Non-qualifying withdrawal penalty | 25% of withdrawal amount |
| Effective loss of own money from penalty | ~6.25% of contributions |
| Available as Cash LISA or S&S LISA | Yes — both types exist |
The LISA withdrawal penalty deserves special attention. The 25% charge is applied to the total withdrawal (your contributions plus the bonus), not just to the bonus itself. If you contribute £4,000, receive a £1,000 bonus (total £5,000) and then make a non-qualifying withdrawal, the 25% penalty is £1,250 — leaving you with £3,750 against your £4,000 contribution. You have effectively lost £250 (6.25%) of your own money. This makes the LISA an inflexible vehicle for any purpose other than FTB purchase or retirement.
The LISA cannot be transferred to another ISA type (only to another LISA). It is not suitable as a general savings account, an emergency fund, or for any goal where you may need early access to funds.
Junior ISA: Building a Child's Financial Future
The Junior ISA allows parents, guardians and family members to save up to £9,000 per child per tax year in a tax-free wrapper. This allowance is entirely separate from the adult £20,000 limit — a family of two parents and two children can shelter up to £58,000 per year across all their ISAs (£20k + £20k + £9k + £9k).
A parent or guardian opens and manages the Junior ISA; the child can take over management rights at 16, though they still cannot withdraw until 18. At 18 the JISA automatically rolls into a standard adult ISA in the child's name, with no action required. If you have a Child Trust Fund (CTF), you can transfer it into a JISA.
Cash Junior ISAs earn interest tax-free. Halifax currently pays 4.1% AER on its Cash JISA (May 2026). Stocks & Shares JISAs invested in a global index fund over 18 years have historically produced substantially higher returns than cash, though with more volatility year-to-year. For long time horizons, many advisers suggest a S&S JISA over a Cash JISA.
How to Use Multiple ISAs Together
Since April 2024, you can contribute to multiple ISAs of the same type in one tax year. A practical multi-ISA strategy might look like this:
- Cash ISA: £5,000 for an accessible emergency fund (3–6 months expenses)
- Lifetime ISA: £4,000 for first-home savings (earning £1,000 free government bonus)
- Stocks & Shares ISA: £11,000 into a global index tracker for long-term wealth (10yr+)
- Junior ISA: £9,000 (separate allowance) for a child — invested in a S&S JISA
Total adult ISA use: £20,000 (£5k + £4k + £11k = £20,000). Junior ISA is additional. This strategy covers short-term liquidity, medium-term FTB goals, and long-term investment growth — all tax-free.
ISA Transfers: What Moves Where
Always use an official ISA transfer form from your new provider — never withdraw and re-deposit, as re-deposited funds count against your current year's allowance. Transfer rules in summary:
- Current-year subscriptions must be transferred in full
- Previous-year ISA balances can be partially transferred
- You can transfer a Cash ISA into an S&S ISA (and vice versa)
- You cannot transfer any other ISA type into a LISA — only new subscriptions qualify for the LISA bonus
- Junior ISAs cannot be transferred to adult ISAs until the child turns 18
- Child Trust Funds can be transferred into a Junior ISA at any time
Related Guides and Tools
Use our ISA Growth Calculator to model your own contributions over time, or compare Cash ISA vs Stocks & Shares ISA and Cash ISA vs Savings Account for more targeted comparisons.