Cash ISA vs stocks and shares ISA vs Lifetime ISA

An ISA is a tax-free wrapper for your savings or investments. You can put in up to £20,000 a year in total, split across different types however you like.

Cash ISA

A savings account where the interest is tax-free. Good for your emergency fund and anything you'll need within about five years. Most people don't pay tax on savings interest anyway thanks to the Personal Savings Allowance, but cash ISAs matter more as balances and rates rise.

Stocks and shares ISA

Lets you invest in funds and shares with no tax on growth or dividends. Values go up and down, so it's for money you won't need for at least five years. Over long periods, investing has historically beaten cash, but there are no guarantees.

Lifetime ISA

• Open between ages 18 and 39; pay in up to £4,000 a year until 50
• The government adds a 25% bonus, up to £1,000 a year
• Use it for a first home costing up to £450,000, or from age 60
• Withdraw for any other reason and you pay a 25% charge, which means losing slightly more than the bonus
• From 29 October 2026, the charge is 20% if you withdraw to buy a home over the £450,000 cap

The Lifetime ISA closes to new savers in April 2029, when a new First-Time Buyer ISA replaces it. See our First-Time Buyer ISA guide.

Which one for you?

General information, not financial advice. Investments can fall as well as rise.