# Cash ISA vs Stocks & Shares ISA — which UK ISA is right for you?

> Compare · Last reviewed 26 May 2026

Canonical HTML: https://moneyguide.org.uk/compare/cash-isa-vs-stocks-and-shares-isa/
Markdown mirror: https://moneyguide.org.uk/compare/cash-isa-vs-stocks-and-shares-isa.md

## Quick answer

A Cash ISA holds cash and pays interest tax-free. A Stocks & Shares ISA holds investments — returns can be higher over the long run but the value can fall as well as rise.

## Skip this if

Skip this comparison if you need a live quote or a personal recommendation. It is a criteria table, not a product ranking — confirm today's terms with the provider before you apply.

Both are wrappers that protect your money from UK Income Tax, Dividend Tax and Capital Gains Tax. The £20,000 annual ISA allowance is shared across all types you hold. The right choice depends almost entirely on your time horizon and your tolerance for short-term loss.

## Cash ISA vs Stocks & Shares ISA

| Criterion | Cash ISA | Stocks & Shares ISA |
| --- | --- | --- |
| What it holds | Cash deposits | Funds, shares, ETFs, investment trusts, bonds |
| Typical use | Emergency fund, short-term savings | Long-term investing (5+ years) |
| Capital risk | None — capital protected | Capital can fall as well as rise |
| Headline return type | Interest (fixed or variable) | Capital growth + dividends |
| FSCS cover | £85,000 per banking licence | £85,000 per platform for cash held; investment loss not covered |
| Annual ISA allowance | £20,000 (shared) | £20,000 (shared) |
| Tax on growth/interest | None inside the wrapper | None inside the wrapper |
| Typical charges | None | Platform fee + fund OCF (often 0.2–1.0% combined) |
| Access | Easy-access or fixed-term | Sell investments to access — usually 2–3 working days |

## When Cash ISA suits

- You will need the money inside five years
- You want certainty of capital
- You are using it as an emergency fund
- You have already filled your Personal Savings Allowance and want to keep interest tax-free

## When Stocks & Shares ISA suits

- You won't need the money for at least five years (ideally longer)
- You can stomach the value falling in the short term
- You want a realistic chance of beating inflation
- You're investing for retirement, a child's future or a long-term goal

## Frequently asked questions

### Can I have both a Cash ISA and a Stocks & Shares ISA in the same tax year?

Yes. Since 6 April 2024 you can pay into more than one ISA of the same type in the same tax year, and you can split your £20,000 allowance across both a Cash ISA and a Stocks & Shares ISA in any proportion.

### Is a Stocks & Shares ISA risky?

The wrapper itself is not risky. The risk depends on what you hold inside it. A global index fund is lower risk than a single share. The value can fall as well as rise, so it is not suitable for money you will need soon.

### Which gives better returns over 10 years?

Historically a diversified Stocks & Shares ISA has outperformed cash over rolling 10-year periods, but there is no guarantee. Past performance is not a guide to future returns.

### What happens to my ISA if the bank or platform fails?

Cash up to £85,000 is protected by the Financial Services Compensation Scheme per banking licence (Cash ISA) or per investment firm (cash sitting in a Stocks & Shares ISA). Investment losses caused by market falls are not covered.

## Sources

- [HMRC — Individual Savings Accounts](https://www.gov.uk/individual-savings-accounts)
- [FSCS — what we cover](https://www.fscs.org.uk/what-we-cover/)

---

Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.