UK ISA types compared — cash, stocks & shares, LISA, IFISA and Junior

The UK ISA system has accumulated some complexity over its 25-year life. There are now five distinct types of ISA wrapper, and most savers will use two or three of them in combination. This guide compares them — what each does, what each is good at, and how they share (or don’t share) the annual allowance.

It’s educational, not advice. Sources are HMRC’s ISA guidance pages and the Treasury ISA factsheets.

The shared allowance — £20,000

The cornerstone rule: across all adult ISAs combined, you can pay in up to £20,000 per tax year. That covers cash ISAs, stocks & shares ISAs, Lifetime ISAs (capped at £4,000 inside the £20,000) and innovative finance ISAs. The Junior ISA is separate.

Two consequences:

1. Adding £20,000 to a cash ISA leaves nothing for a stocks & shares ISA in the same year.
2. The allowance doesn’t roll over. Unused allowance on 5 April vanishes at midnight.

You can track your usage against the allowance with our calculator.

1. Cash ISA

The simplest wrapper. A cash ISA is a savings account where the interest is tax-free, no matter how much you eventually hold. It comes in three main shapes:

• Easy-access: variable rate, withdraw any time.
• Fixed-rate: rate locked for 1–5 years, with penalties for early withdrawal.
• Regular saver: pays headline rates (5–7%) but capped monthly deposits (£100–£500).

Best for: cash you might need within 5 years, particularly if you’ve filled or are approaching the Personal Savings Allowance outside an ISA wrapper.

Watch outs: not all cash ISAs accept transfers in, and not all are flexible. See our flexible ISAs guide.

2. Stocks & Shares ISA

Same wrapper, different contents. A stocks & shares ISA lets you hold investments — funds, ETFs, individual shares, bonds, investment trusts — and pays no UK income tax on dividends, no UK CGT on gains.

Most platforms offer either a percentage fee (typically 0.15–0.45% per year) or a flat fee (typically £10–£20 per month). The fee structure matters more the bigger the pot — at £100,000, a 0.45% fee is £450/year; a flat £10/month is £120.

Best for: money you genuinely won’t need for at least 5 years. The maths is that UK and global equity markets have historically returned 5–7% real (after inflation) over long periods, but with 30–50% peak-to-trough drawdowns at the worst points. Holding equities for less than 5 years risks selling at the bottom.

Watch outs: platform fees, dealing costs (especially for individual shares), and the natural pull toward over-trading. The all-time peer-reviewed conclusion: low-cost broad-market index funds, held for decades, beat most active strategies.

3. Lifetime ISA (LISA)

The newest mainstream ISA, launched in 2017. The LISA gives a 25% government bonus on contributions up to £4,000 per tax year — so up to £1,000 a year added by HMRC.

Constraints:

• Must be aged 18–39 to open one (you can keep contributing until 50).
• Penalty-free withdrawal only for a first home (purchase price under £450,000) or after age 60.
• 25% penalty on withdrawals for any other reason — which works out to a small loss on your own contribution, not just a clawback of the bonus.
• 12-month minimum holding period before first use.

LISAs come in cash and stocks & shares variants. Most first-home savers on a 3–10 year horizon use cash; longer-horizon retirement savers may use stocks & shares.

Best for: under-40s saving for a first home under £450k, or retirement savers who want a top-up alongside their pension.

Watch outs: the £450k property cap has not moved since 2017 and excludes a meaningful share of London and the South East. The penalty is genuinely punitive — model the worst-case before opening.

See our first-time buyer route map for how the LISA fits with mortgage and SDLT planning.

4. Innovative Finance ISA (IFISA)

The IFISA wraps peer-to-peer lending and certain crowd-funded debt investments in a tax-free shell. Contributions count toward the £20,000 allowance.

Underlying products are riskier than cash and generally not covered by the FSCS — investors can and do lose money. The IFISA market has shrunk significantly since the late 2010s as several major P2P platforms have wound down their consumer lending books.

Best for: investors with a high risk tolerance who are willing to spend time understanding the underlying loan books.

Watch outs: the “7–10% advertised return” pricing usually reflects default risk that isn’t always obvious. Treat IFISA money as part of a high-risk equity-style allocation, not as a cash substitute.

5. Junior ISA

The Junior ISA (JISA) is for under-18s. It has a separate £9,000 annual allowance that doesn’t affect the adult £20,000.

Key features:

• Opened by a parent or guardian, held in the child’s name.
• Locked until the child turns 18, at which point it converts to an adult ISA.
• The child takes legal control of the JISA at 16 but can’t withdraw until 18.
• Available in cash and stocks & shares variants.

Best for: grandparents and parents who want to build a long-term tax-free pot for a child — 18 years of compounding inside a stocks & shares JISA is genuinely powerful.

Watch outs: the money becomes the child’s at 18. They can spend it on whatever they like. Some families prefer to keep the savings in the parent’s name and gift money at 18+ for that reason.

Side by side

	Cash ISA	S&S ISA	LISA	IFISA	Junior ISA
Annual cap	Share of £20k	Share of £20k	£4k (inside £20k)	Share of £20k	£9k separate
Government bonus	No	No	25% (£1k max)	No	No
Eligible age	18+	18+	18–39 to open	18+	0–17
Locked?	No	No	Yes (until 60 or first home)	Variable	Until 18
Best held in	Cash	Equities/bonds	Cash or equities	P2P loans	Cash or equities
Tax-free	Interest	Dividends & gains	Both, plus bonus	Interest	Interest, dividends & gains

A pattern that works for many people

The mix that’s common in UK personal finance:

• 3–6 months of expenses in an easy-access cash ISA — the emergency fund.
• A stocks & shares ISA for the long-term portion — usually invested in a low-cost global index fund.
• A Lifetime ISA if first-home saving and within the property cap.
• A Junior ISA for any children, opened young and invested in equities.
• IFISA only for those who genuinely understand the credit risk and want it as part of a high-risk allocation.

The split between the wrappers is the second-order decision. The first-order decision — and the one that has the biggest long-term impact — is using the allowance year on year, because what you don’t use, you lose.

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Last updated 22 May 2026. This guide is educational and is not personal financial advice. ISA rules can change between budgets — confirm on gov.uk before acting. See our disclaimer.