Cash ISA vs Stocks & Shares ISA Calculator 2026

Cash ISA vs Stocks & Shares ISA Calculator

Compare how your savings could grow in a Cash ISA versus a Stocks & Shares ISA over time. Enter your contribution details and expected rates to see the projected difference.

How Cash ISAs and Stocks & Shares ISAs Differ

Both Cash ISAs and Stocks and Shares ISAs shelter your returns from UK income tax and capital gains tax. The key difference is how your money works inside each wrapper.

A Cash ISA operates like a savings account. Your provider pays a fixed or variable interest rate on your balance, and your capital is protected — you will always get back at least what you put in. In 2026, the best easy-access Cash ISA rates sit between 4% and 5%, with fixed-rate deals paying slightly more for locking your money away.

A Stocks and Shares ISA invests your money in funds, individual shares, bonds or exchange-traded funds (ETFs). Your returns depend on how the underlying assets perform, which means your balance can fall as well as rise. Over the long term, UK equities have historically returned around 7–10% per year on average (FTSE All-Share total return since 1986), but individual years can produce losses of 20% or more.

Both ISA types share the same annual allowance of £20,000 for the 2026/27 tax year. This limit applies across all ISAs combined — you cannot put £20,000 into a Cash ISA and another £20,000 into a Stocks and Shares ISA in the same year. You must be 18 or over and a UK resident to open either type.

Platform fees are the other major difference. Cash ISAs generally charge no fees, while Stocks and Shares ISAs carry an annual platform charge — typically 0.15% to 0.75% depending on the provider. Fund management charges add another 0.10% to 0.50% on top. These fees compound over time and reduce your effective return, which is why the calculator above lets you enter an annual fee to see its impact.

Cash ISA vs Stocks & Shares ISA at a Glance

Both ISA types shelter your returns from UK income tax and capital gains tax, but they behave very differently. A Cash ISA works like a savings account, while a Stocks & Shares ISA invests your money in funds, shares and bonds. The table below compares the key features for 2026.

When to Choose a Cash ISA

A Cash ISA is the better choice when you need certainty about your balance or plan to use the money within five years.

Emergency funds belong in a Cash ISA. Financial guidance from the Money and Pensions Service recommends keeping three to six months of essential spending in an accessible account. A Cash ISA protects this buffer from tax while keeping it available at short notice.

Short-term savings goals — a holiday, a car, a wedding deposit — also suit a Cash ISA. If you need the money within one to three years, the risk of a stock market dip outweighs the potential for higher returns. The 2020 market crash saw the FTSE 100 drop 34% in a single month; it took until 2021 to recover fully.

If you are approaching retirement and plan to draw from your ISA soon, a Cash ISA reduces the risk of your balance falling at the worst possible time. This is sometimes called sequencing risk — the danger that a poor run of returns early in withdrawal can permanently shrink your pot.

When to Choose a Stocks & Shares ISA

For money you will not need for five years or more, a Stocks and Shares ISA has historically delivered stronger growth than cash savings.

The power of compound returns becomes significant over longer horizons. At 7% per year, £10,000 doubles in roughly ten years. At 4.5%, the same doubling takes sixteen years. Over twenty or thirty years, this difference compounds into tens of thousands of pounds, as the example scenarios below illustrate.

Younger investors in particular benefit from a Stocks and Shares ISA. A 25-year-old saving £200 a month until retirement at 67 has a 42-year horizon — long enough to ride out multiple market downturns and benefit from the historical upward trend of equity markets.

Diversification reduces risk. A global index tracker fund spreads your money across thousands of companies in dozens of countries. While individual stocks can fall to zero, a broadly diversified fund has historically recovered from every major crash. The key requirement is patience — you need to be comfortable seeing your balance drop temporarily without selling.

Example ISA Comparison Scenarios

The scenarios below show how the same money could grow in a Cash ISA versus a Stocks & Shares ISA over different time horizons. Stocks & Shares figures assume steady average returns after a 0.45% platform fee — in reality investment returns vary year to year and can be negative. All figures use annual compounding for simplicity.

Scenario 1: Priya — Saving for a House Deposit (3 Years)

Priya, 29, from Leicester, has a £10,000 lump sum she plans to put towards a house deposit in three years. She compares a Cash ISA paying 4.5% with a Stocks & Shares ISA averaging 7% a year (6.55% after a 0.45% fee).

The Stocks & Shares ISA finishes about £685 ahead on average returns, but a market dip near her purchase date could easily wipe out that gap — over a short 3-year horizon, the guaranteed Cash ISA is usually the safer choice for money Priya cannot afford to lose.

Scenario 2: Tom — Building a Nest Egg (10 Years)

Tom, 38, from Cardiff, starts with £5,000 and adds £200 a month (£2,400 a year). He compares a Cash ISA at 4.5% with a Stocks & Shares ISA averaging 7% (6.55% after fees) over 10 years. His total contributions come to £29,000.

Over a decade the Stocks & Shares ISA pulls roughly £4,636 ahead, and with 10 years to ride out market dips, investing typically wins for Tom — though a Cash ISA would still suit any portion of the money he might need at short notice.

Scenario 3: Margaret — Long-Term Retirement Saving (20 Years)

Margaret, 45, from Edinburgh, starts from zero and invests £300 a month (£3,600 a year) for 20 years to top up her retirement income. She compares a Cash ISA at 4% with a Stocks & Shares ISA averaging 7.5% (7.05% after fees). Her total contributions come to £72,000.

Over 20 years the Stocks & Shares ISA delivers around £41,191 more than cash — more than double the growth — showing that for long horizons the compounding power of investing almost always beats a Cash ISA, which is best kept for Margaret’s emergency fund rather than her retirement pot.

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