Stocks & Shares ISA - Find the Right Fund Platform | moneyfacts.co.uk

Stocks and Shares ISAs / Investment ISAs

  - Often referred to as Investment ISAs, Stocks & Shares ISAs can offer a tax-efficient investment opportunity for your ISA allowance.
 

If you're looking for a tax-efficient savings vehicle, and are comfortable with an element of risk, a stocks and shares ISA could be for you. It's essentially a tax-free way of investing in the stock market, and has the potential to secure better returns than the interest earned on a cash ISA.  

Exo Investing Stocks and Shares ISA
Exo Investing
Account Type
Investment ISA
Min. Investment
£10,000
Funds available: 585

Further information...
The Exo Investing Stocks and Shares ISA gives you daily management for your individual portfolio for a low all-inclusive fee.

Choose where in the world, and what, you want to invest in. Exo will automatically select the funds, matching these to your investment profile and risk appetite to build your personal stocks and shares ISA and manage it daily.

Plus you have the freedom to make changes whenever you want at no additional cost. Capital at risk.

Legal & General Stocks and Shares ISA
Legal and General
Account Type
Stocks & Shares ISA
Min. Investment
£20 per month /
£100 lump sum
Funds available: 47

Further information...
Legal & General has been helping customers dating back to 1836. As at 31 December 2017, the total value of assets across the group was £983.3 billion, including derivative assets. We also had over 9.5 million customers in the UK for our life assurance, pensions, investments and general insurance plans. You can invest up to £20,000 this tax year in a stocks and shares ISA. Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

Barclays Investment ISA
Barclays Stocks and Shares
Account Type
Investment ISA
Min. Investment
Any lump sum

Further information...
Clear, straightforward pricing with no hidden charges.
Invest in over 2,000 funds plus Exchange Traded Funds (ETFs), Investment Trusts, shares, new issues and more.

Investments can fall in value. Barclays Smart Investor doesn't offer advice. If unsure, seek independent advice.

Hargreaves Stocks and Shares ISA
Hargreaves Lansdown Stocks and Shares
Account Type
Investment ISA
Min. Investment
£100 or £25/month
Funds available: 2,500 funds

Further information...
The Hargreaves Stocks and Shares ISA has no dealing charges for funds, plus a low cost reinvestment service. There are super low annual charges on a range of leading funds, exclusive low charges on leading tracker funds and low annual account charge for funds of just 0.45%

94% of our clients rate our service as good, very good or excellent. (Survey in September, 2014 9,371 respondents)

Shepherds Friendly Stocks and Shares ISA
Shepherds Friendly
Account Type
Investment ISA
Min. Investment
£30
Funds available: 1

Further information...
The Shepherds Friendly Stocks and Shares ISA is actively managed by a team of expert fund managers and can be opened from £30 a month, or with an initial lump sum from as little as £500. Managing your savings online is easy too, you can log-in to 'Your account' on the move, with the ability to add money to your plan whenever you want.

Additionally, when opening a Shepherds Friendly Stocks and Shares ISA, we'll give you a Love2shop voucher worth up to £30, which can be spent at various online retailers. Terms and conditions apply, see Shepherds Friendly website for more details.

Remember, when investing your capital is at risk, and the value of your ISA may go down as well as up.

Nutmeg Stocks and Shares ISA
nutmeg
Account Type
Investment ISA
Min. Investment
£500
Funds available: 10 managed and 5 fixed allocation portfolios

Further information...
Get an intelligent stocks and shares ISA portfolio with Nutmeg. Choose a portfolio that's fully managed by our expert team, or one designed to remain steady and re-balance automatically. No tie-ins, no set-up fees, no exit charges. Easy, online set up in minutes. Start with as little as £500 (plus £100 per month for ISAs below £5,000). Management fees of 0.25% to 0.75% depending on how much you invest. There are also underlying charges, please see our fees page. Plus live chat, amazing customer support and brilliant investor tools and guides. Authorised and regulated by the FCA and protected by the FSCS. Capital at risk.

One Family Junior ISA
One Family
Account Type
Junior ISA
Min. Investment
£10 per month
Funds available: 2 funds

Further information...
The OneFamily Junior ISA helps you to invest for your child's future. It could help towards going to uni, driving lessons or perhaps helping to pay for a flat of their own.

It's designed to be a long term children's investment. You invest for your child's future, and only the child can take the money out and only once they're 18. Because it invests in stocks and shares, the Junior ISAs value can fall as well as rise, so your child could get back less than has been paid in.

Open your child's Junior ISA online and set up a Direct Debit and as a thank you OneFamily will send you up to £50 in e-vouchers (gift terms and conditions apply - please see OneFamily website).

Moneyfarm Stocks and Shares ISA
Moneyfarm
Account Type
Investment ISA
Min. Investment
£1
Funds available: 12 portfolios

Further information...
A Moneyfarm Stocks and Shares ISA offers a personalised, hassle-free, tax-free investment solution. Moneyfarm crafts a portfolio suited to your investor profile and risk tolerance, then fully manages it on your behalf, so you don't have to. Whilst there is no minimum investment, it is recommended to start with £1,500 or more to get a fully diversified portfolio. There is one low management fee ranges from 0.4% to 0.7%, plus the underlying cost of the investments. Regulated by the FCA and protected by the FSCS. Your capital is at risk.

£20,000 managed free of charge for 1 year with code MFACT20K.

Munnypot Stocks and Shares ISA
Munnypot
Account Type
Stocks & Shares ISA
Min. Investment
£25 per month and/or £250 lump sum
Funds available: 5 funds

Further information...
The Munnypot Stocks & Shares ISA is provided in combination with automated online investment advice. Munnypot looks after you from the moment your account is set up, automatically utilising your ISA allowance and monitoring the performance of your investment 24/7 in relation to your goals. Unlike most online investment services, if an investment performance deviates negatively away from the goal, Munnypot will automatically notify you and provide online advice via our chatbot on how you can get your goal back on track. With Munnypot, you can choose to withdraw your money for free at any time.

The value of investments can go down as well as up, so you could get back less than you invest. Capital is at risk.

The Moneyfacts investment ISA product table

The list of ISAs given above is not an outline of the best investment funds or a whole of market overview, but it gives you an idea of the kind of options available. You can find out more about the individual products by heading to any of the providers listed (moneyfacts.co.uk will be paid an introduction fee if you go on to invest). Remember that these are non-advised services, so if you're unsure, please seek investment advice.


Stocks & Shares ISAs Explained

Stocks and shares ISAs are different to cash ISAs, which are simply tax-free savings accounts. As the name suggests, with a stocks and shares ISA you can invest in government or corporate bonds, shares and funds. Any gain is tax-free, and you can invest up to £20,000 in the current tax-year. 


On this page:

  1. What is a stocks & shares ISA?
  2. Pros of investment ISAs
  3. Cons of investment ISAs
  4. Different types of stocks and shares ISAs
  5. Stocks and shares ISA rules
  6. ISA transfers
  7. Is investing a good idea?
  8. Should I consider both kinds of ISA?
  9. Fees and charges
  10. What's the difference between a cash ISA and an investment ISA?
  11. Understand the risks

What is a stocks & shares ISA?

A stocks and shares ISA, otherwise known as an equity or investment ISA, is a way of investing in shares and a wide range of funds on the stock market. It is a tax-efficient way of investing as gains are exempt from tax. 

Over the long term, returns from an investment ISA are likely to be greater than the interest you can earn on a cash ISA, but the risks are higher too, so it’s worth weighing up your options before investing your hard-earned cash.

Pros of investment ISAs

  • Investment ISAs allow for tax-free investing, meaning you won’t have to pay income or capital gains tax on any gains
  • Gains are likely to be better with an investment ISA than you could earn in interest on a cash ISA, if you take a long term view of your investment
  • It is possible to invest in different markets enabling you to diversify your portfolio

Cons of Investment ISAs

  • If your funds underperform, you do run the risk of losing money
  • FSCS protection only covers you up to £50,000 per firm. The FSCS does not protect against investment losses, only if your investment provider goes bust.

Different types of stocks and shares ISAs

A stocks and shares ISA will invest your money across your choice of funds in the stock market. The majority of such accounts use collective investment funds, such as Unit Trusts or Open Ended Investment Companies (OEICs), and investors can either receive a form of income during the term of their investment or wait until they cash in their pot.

Stocks and shares ISAs can comprise of:

  • Corporate bonds. You ‘lend' your money to a corporate entity in return for interest.
  • Government bonds. As above, except you're lending money to a government.
  • Shares. You invest in an individual company, and if the value of that company goes up, so does the value of your share (and vice versa).
  • Funds. These can include a range of entities, often covering bonds, shares and even cash, allowing you to diversify your investments without needing to engage in individual stock trading. Funds typically have a set theme (such as a particular geographical location or industry) and investments are made accordingly. Most stocks and shares ISAs are based on funds.

Funds will typically be set up as Unit Trusts (which are set up in trust form, meaning it's a separate entity from the fund manager's company; when you invest you get ‘units' of that trust), OEICs (investment funds that are set up using company law as a separate entity from the fund manager's own company; when you invest you get a specified number of shares) or even life insurance funds.

In many cases, you'll be choosing your stocks and shares ISA – and by default, your funds, bonds or shares, etc. – through a platform, which is essentially a ‘fund supermarket'. You first need to decide on the platform (or provider) you want to use before deciding on the funds you want to invest in.

This decision can be based on many things, such as the minimum investment, the fees, the range of investments or the amount of flexibility it offers you in managing your funds – there is no such thing as the best investment isa, only the one that works best for you. Don't hesitate to seek advice if you're not sure what you are looking for.

Stocks and shares ISA rules

  • You can invest up to £20,000 in the 2018/19 tax year
  • You can only contribute to one investment ISA in any tax year, but you can split the £20,000 allowance between different kinds of ISA as you see fit
  • You can choose to make regular monthly payments, or invest a lump sum
  • You are not tied to the same ISA manager year-in-year-out, you can transfer to a different platform, but should follow the transfer rules (see below) to retain the tax-free advantage of investing via an ISA, do not simply cash in your existing ISA as it will lose its tax-free status, and if the cash mounts up to more than your yearly allowance, it could prove costly.
  • Your ISA savings from previous years can be split into different accounts, but if you want to move this year’s allowance, you must transfer the full amount
  • You can switch from a stocks and shares ISA to a cash ISA, and vice versa should you wish 
  • ISA firms must allow transfers out, but there are no rules to force them to accept transfers in, so make sure you check before you start the process
  • You cannot carry the allowance forward to the next year, so if you don’t use it, you lose it!

ISA transfers

It's worth pointing out that, although you can only have one active investment ISA per tax year and can only invest £20,000 in ‘new' money, there's nothing to stop you from moving previous years' savings between different accounts. This won't count towards your annual allowance, so you can move money around from previous years and still make new contributions, and there's no limit to the number of stocks and shares ISAs you can accumulate over the years.

There are several reasons you may want to move investment ISA funds from one account to another. You may have calculated that you'll be better off with a different provider that offers lower fees, or perhaps one that has a wider investment choice with more share trading opportunities. You may simply be unhappy with your current provider and want better value and enhanced customer service – in any of these scenarios, you'll want to compare investment ISAs to scout out the best investment funds, and potentially move your money over.

However, there's a special process you'll need to follow if you want to retain the tax-efficiency of your already invested funds – don't simply sell the shares, withdraw the proceeds and start from scratch – and there are a couple of routes you can go down.

  • In-specie transfers. This involves a stock transfer whereby all the investments you hold, and all the funds you're invested in, are transported to your new provider with you staying invested throughout the process. This type of transfer is ideal for those who are happy with their investments and don't want to make any changes or get involved in new stock trading, but because you're still invested, the process can take longer (typically four to six weeks). There may also be exit fees to pay, which you should always look at when comparing the best investment ISA funds.
  • Cash transfers. This option involves you selling your investments and the proceeds being sent to your new provider, effectively allowing you to start the process over and begin investing in shares from scratch. Despite this, the tax-free status of your money remains intact, and your new provider will reinvest those funds according to your instructions. It's generally a quicker process, but as you're not invested you could miss out on gains from your previous investment, so it will depend on your goals.

There's also the option to transfer funds held within a cash ISA into a stocks and shares version, and likewise, you can transfer your stocks and shares ISA into the security of cash should you wish. Again, there's a set process to follow with each, and you'll need to contact your new provider and fill in a transfer form to retain your money's tax-free status.

Is investing a good idea?

This question all comes down to your personal circumstances and your attitude to risk. Investing in stocks may not be entirely safe, but it can be ideal for those who can afford to lose some of their cash if the market doesn't perform as well as was hoped, as for some, the trade-off of potentially far higher returns could be worth it.

After all, investments have a far higher chance of beating inflation over the long term. The best performing stocks and shares ISA certainly looks far more appealing than the top cash alternative, but again, there are risks, so you'll need to weigh up the facts, and past performance is no guarantee of what the fund might achieve in the future.

Should I consider both kinds of ISA?

This depends on your attitude to risk, and the phrase “don't put all your eggs in one basket” is particularly worth remembering. Cash ISAs will be preferable for those who don't want to take any risk whatsoever with their money, and would instead prefer the security of capital protection and a guaranteed return.

Stocks and shares ISAs, on the other hand, could be ideal for those who can afford to take more of a risk with their money and are comfortable with taking a long-term view, with their key objective being long-term growth (or income, depending on the type of account chosen). Of course, you'll want to keep a certain amount of cash savings accessible at all times – either in an easy access cash ISA or traditional savings account – but if you've got a suitable financial buffer and want the potential of greater returns, a stocks and shares ISA could be worth considering.

Fees and charges

Our stocks and shares ISA list above allows you to choose from several platforms and fund managers, most of which have a range of funds you can invest in thereafter. It's worth pointing out that you'll typically be charged both for using the platform and for buying the funds – investing in stocks and shares always comes with associated fees – so make sure to consider both when comparing accounts.

Once invested, the returns you receive from your stocks and shares ISA will be linked to the performance of funds, stock markets or specific shares, depending on the type of account you choose, and the profit you receive will be based on that performance. However, this is where the risk comes in – the value of your investments can fall as well as rise and your capital isn't guaranteed, so like with any form of share trading, you may get back less than you put in.

Whichever stocks and shares ISA you choose, you will need to make sure that the entities you invest in meet your objectives and you are comfortable with the level of risk involved. You should regularly review the performance of your chosen funds to ensure they are suitable for you over the longer term.

What's the difference between a cash ISA and an investment ISA?

The key difference between cash ISAs and investment ISAs is that the cash version holds onto your cash and pays interest at a set rate – either variable or fixed, the latter guaranteeing your eventual returns if you invest a lump sum – with your capital not being subject to investment risk. Interest will be paid entirely tax-free, and even when interest rates are low, you can be safe in the knowledge that you won't lose your initial deposit.

In contrast to a cash ISA, stocks and shares ISAs actively invest your money into external funds or company shares for the potential of bigger returns – you're actively buying and selling shares, either personally or through a managed portfolio. An investment ISA is not a savings account, and should be viewed purely as an investment product.

It's far more complex than a cash version – there are several different products you can choose from and funds you can invest in depending on your goals, with the key decision being whether you want to generate an income (in which case you'd choose income generating funds, denoted by the term “Inc”) or grow your initial investment (whereby you'd need accumulation funds, denoted by the term “Acc”).

You need to make sure you're comfortable with the level of risk involved, as well as the long-term nature of equity ISAs – investing in shares requires a long-term view, which means you should be willing to keep your money invested for several years (while most funds can be sold at relatively short notice, this type of account won't be good for those who may need to dip into their savings in an emergency, so make sure you view it as a longer-term undertaking).

This offers the best scenario for growth and will give you the chance to weather any fluctuations in the stock market, and hopefully secure a profit at the end of it. But there's no guarantee – a stock and shares ISA is a higher-risk home for your money, with the returns based on the performance of the specific funds, so there's a chance you could lose some or all of your initial investment, potentially leaving you with less than you put in.

Past performance should never be seen as an indicator of future returns, so even if you pick the best performing stocks and shares ISA funds, you can't guarantee that the same performance will continue. This means that, despite the potential to secure better returns than with a traditional savings account, it's important to be prepared that you may end up worse off. There are different rules regarding FSCS protection, too – while ISA investments are covered by the FSCS, they will only be covered up to £50,000 instead of the £85,000 that cash ISA savers benefit from.

You'll also want to remember that, even though your investments will essentially be held in a tax-free account, there could still be certain tax payments and fund charges applicable. Investment ISAs are exempt from income and capital gains tax, while the taxation of dividends changed in April 2016, so that dividends are also paid free of tax if held within an ISA. However, these ISAs will usually charge fees, particularly when you're actively stock trading, so always check the small print to see if the particular account is worth it. There may not be a single best investment ISA, but if you carefully compare stocks and shares ISAs, you should be able to find the best stocks and shares ISA for your requirements.

Understand the risks

This really can't be reiterated enough – before you start stock or share trading through an investment ISA, you need to be fully aware of the risks involved, and more importantly, you need to be comfortable with those risks.

  • Any investment comes with an element of risk, particularly those with the prospect of higher returns, and this is certainly the case with stocks and shares ISAs. Over time there could well be fluctuations in the value of an investment, with the total value and any income generated going down as well as up, and in a volatile market some investors may get back less than they put in.
  • Different types of investment funds have different levels of risk - or to put it another way, they will be more volatile. For example, funds investing in smaller companies or emerging markets will be more volatile than funds that invest in UK blue chip firms. Also, growth funds investing in shares are likely to be more volatile than funds investing in fixed interest investments such as Government gilts or corporate bonds.
  • It is usually a good idea to invest across a range of investment types (or asset classes) such as shares, bonds, property and cash to spread your risk. How much you invest in each category will depend on how much risk you are prepared to take, and how long you intend to invest for. Whatever you choose, remember that past performance should never be seen as an indicator of future returns – even the best performing stocks and shares ISA can disappoint.

Ultimately, remember that this kind of account will always be riskier than a cash ISA, and it should be viewed as a long-term investment to counter the risks of stock market volatility. Tax advantages will depend on your circumstances and may change in the future.

Stocks and shares, like their cash ISA counterparts, are regulated by the Financial Conduct Authority, which means that investing in a stocks and shares ISA should not come with the risk of the ISA provider running off with your funds. The risk therefore comes solely from the nature of investing in the stock market, with between £50,000 and £85,000 protected (per person, per institution thanks to the FSCS) should the provider go bust.

What next?

See above for a selection of the best investment funds and stocks and shares ISAs Want more security? Consider a cash ISA instead

Disclaimer: This is a basic guide to stocks & shares ISAs. It does not cover every circumstance and nor is it intended to be a source of advice. This information is aimed at customers within the UK. Tax treatment depends on your individual circumstances and may be subject to change.

6 of the best two-year cash ISAs
6 of the best two-year cash ISAs

Fixed rate cash ISAs have seen some welcome movement recently, as several providers have improved th... More

ISAs increasingly out of favour
ISAs increasingly out of favour

Recent HMRC statistics reveal that there was a decline in ISA subscriptions just one year after the ... More

LISAs outstrip Help to Buy ISA bonus
LISAs outstrip Help to Buy ISA bonus

With the first lifetime ISA (LISA) bonuses now successfully paid to savers, analysis shows that the ... More

Parents worried about Junior ISA access
Parents worried about Junior ISA access

The royal family may not have to worry about setting funds aside for the new fifth heir to the thron... More

First LISA buyers ready to go
First LISA buyers ready to go

The first lifetime ISA savers may be getting ready to use their funds to buy that all-important firs... More

What is a cash ISA?
What is a cash ISA?

Cash ISAs are a special type of savings account that pay interest tax-free. Each tax year you get an... More

2018-19 ISA Allowance Guide
2018-19 ISA Allowance Guide

Download your FREE Guide to ISA allowances for the 2018-19 tax year. Find out everything you need t... More

How to transfer a cash ISA
How to transfer a cash ISA

Cash ISA transfers can allow you to get a better interest rate and bring your ISAs together in one p... More

Wesleyan improves fixed rate cash ISAs
Wesleyan improves fixed rate cash ISAs

Wesleyan Bank has increased selected cash ISA rates by up to a whopping 0.95%. Consequently, its one... More

Sainsbury’s new one-year ISA enters chart
Sainsbury’s new one-year ISA enters chart

Sainsbury’s Bank has relaunched its one-year fixed rate ISA, which has entered the Best Buy chart fo... More

Hodge Bank improves fixed ISAs
Hodge Bank improves fixed ISAs

Hodge Bank has increased selected rates by up to 0.10%, which sees its one, two, four and five-year ... More

Coventry’s variable rate ISAs improved
Coventry’s variable rate ISAs improved

Coventry BS has increased the rates on its easy access and notice ISAs by 0.10%, which sees both imp... More

Al Rayan’s improved easy access ISA tops chart
Al Rayan’s improved easy access ISA tops chart

Al Rayan Bank has increased the rate on its easy access ISA by 0.13%. This has made the account mark... More

Close