Risk warning: Don't invest unless you're prepared to lose all the money you invest. Peer-to-peer lending is a high-risk investment and is not covered by the Financial Services Compensation Scheme (FSCS). You are unlikely to be protected if something goes wrong. Take 2 minutes to learn more.

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Types of ISA explained

There are five main types of ISA. They share one £20,000 annual allowance but do very different jobs, from FSCS-protected savings to high-risk lending. Here's each one, plainly.

Last reviewed May 2026 · by Gareth Hoyle

Gareth Hoyle

Gareth Hoyle · Founder & Editor

Reviewed May 2026. Independent researcher, not a financial adviser. About Gareth

An ISA (Individual Savings Account) is a tax-free wrapper: any interest, dividends or growth inside it is free of UK tax. You can pay up to £20,000 across ISAs in the 2026/27 tax year, split however you like (with one exception: the Lifetime ISA is capped at £4,000). Here are the five main types.

1. Cash ISA

A savings account in an ISA wrapper. You earn a set interest rate and your money is FSCS-protected up to £85,000 per banking licence. Lowest risk, fully accessible (on easy-access versions), but returns are modest and may not beat inflation. Best for short-term goals and money you can't afford to lose.

2. Stocks & shares ISA

Invests in funds, shares and other assets for potential long-term growth. Values rise and fall, so you could get back less than you put in, but historically returns have beaten cash over long periods. Best for a 5+ year horizon and people comfortable with ups and downs.

3. Innovative Finance ISA (peer-to-peer)

The peer-to-peer ISA. Instead of cash or shares, it holds P2P loans. You lend to borrowers and earn tax-free interest. Target rates can beat cash, but it is a high-risk investment: capital at risk, not FSCS-protected, and access can be limited. Best only for those who understand they could lose money.

4. Lifetime ISA (LISA)

For first-home buyers and retirement savers aged 18–39. You can pay in up to £4,000 a year and the government adds a 25% bonus. But withdraw for anything other than a first home or after age 60 and you face a withdrawal charge that can leave you with less than you put in.

5. Junior ISA (JISA)

A tax-free account for under-18s, with its own separate allowance (lower than the adult £20,000). Available as cash or stocks & shares. The money is locked until the child turns 18, at which point it becomes theirs.

Which should you choose?

It depends entirely on your goal, timeframe and how much risk you can stomach, and many people sensibly hold more than one. Try the Which ISA quiz, or read our cash vs stocks & shares comparison to think it through.

Keep reading

Compare providers

Independent side-by-side comparison of UK IFISA providers: target rates, minimums, security and transfers.

Which ISA is right for me?

Answer a few questions and see which type of ISA tends to fit your goals, timeframe and risk appetite.

The £20,000 ISA allowance

How the annual ISA allowance works, splitting it across ISA types, and the rules that catch people out.

Cash ISA vs S&S ISA

The classic decision: guaranteed-rate savings vs investing for growth. How to choose, and why not both.

How we keep this honest

peertopeerisa.co.uk is independent. We provide general information and comparison only, not regulated financial advice. Peer-to-peer lending is a high-risk investment: your capital is at risk and your money is not FSCS protected. Some links are affiliate links, which never affect what we write.