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Stocks and shares ISAs

Stocks and shares ISAs

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  • BMO Asset Management Ltd BMO Investment Trust ISA
    Min Lump Sum
    Min Monthly Investment
    Available Funds
  • Healthy Investment Healthy Investment Stocks & Shares ISA
    Min Lump Sum
    Min Monthly Investment
    Available Funds
  • Interactive Investor Stocks & Shares ISA
    Min Lump Sum
    Min Monthly Investment
    Available Funds
  • Advance by Embark Platform Stocks & Shares ISA
    Min Lump Sum
    Min Monthly Investment
    Available Funds
  • Barclays Smart Investor Investment ISA
    Min Lump Sum
    Min Monthly Investment
    Available Funds
  • Beanstalk Beanstalk ISA
    Min Lump Sum
    Min Monthly Investment
    Available Funds
  • Exo Investing Exo Stocks & Shares ISA
    Min Lump Sum
    Min Monthly Investment
    Available Funds
  • Freetrade Freetrade Investment ISA
    Min Lump Sum
    Min Monthly Investment
    Available Funds
  • HSBC Global Investment Centre ISA
    Min Lump Sum
    Min Monthly Investment
    Available Funds
  • IWeb Stocks & Shares ISA
    Min Lump Sum
    Min Monthly Investment
    Available Funds

Eligible investments with UK institutions are protected by the Financial Services Compensation Scheme (FSCS) up to a maximum level of protection of £85,000 per person per institution. All new savings or bank accounts provided to UK customers are now covered by the FSCS.

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The list of Stocks and Shares ISAs on this page 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 visiting any of the providers listed. Remember that these are non-advised services, so if you are unsure, please seek investment advice. All information subject to change without notice. Please check all terms before investing. itself is not authorised by the Financial Conduct Authority for investment business, so we do not endorse any individual ISA products or providers. 

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A guide to stocks and shares ISAs

Michelle Monck

Michelle Monck

Consumer Finance Expert

What is a stocks & shares ISA?

A stocks and shares ISA is a tax-efficient way of investing in shares and a wide range of funds on the stock market. 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. 

How do stocks and shares ISAs work?

When you invest in a stocks and shares ISA, your money is used to purchase a range of products including:

  • Unit or investment trusts/ open-ended investment companies (OEICs) – these are portfolios of bonds, stocks and other securities selected by the fund manager. Funds can be either actively or passively managed.
  • Exchange-traded funds – these can contain a mix of investments, such as stocks, commodities and bonds and track an underlying index.
  • Government and/or corporate bonds – your investment is used as a loan to a company or Government on which you receive a fixed return in the form of interest.
    • Individual stocks and shares – your money is invested into the shares of a specific company, if the company increases in value so will the shares you have invested in.

What is an investment fund?

Although some experienced investors will prefer to select individual stocks and shares, many investors will prefer the convenience of using funds. A fund is managed by a specialist who buys multiple shares with companies or in commercial properties and then offers these as units to multiple investors. The value of a unit in a fund varies day-to-day depending on the demand for the assets it contains.
Funds are usually themed by:

  • Geography – UK, European, North America, Emerging Markets, etc.
  • Industry – sustainable companies, manufacturing, technology, etc.
  • Investment types – shares, bonds, gilts.
    Company size – multi-nationals, smaller companies, start-ups.

What is the difference between a stocks and shares ISA and a cash ISA?

The major difference is that stocks and shares ISAs carry more risk than a standard cash ISA – depending on how the investments do, the value of your ISA could go up or down.
They are not designed for use as a short-term saving method but rather one to have over longer periods, usually a minimum of five years, which increase the chances of having a better return on your money.


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Choosing a stocks and shares ISA

When you choose to invest into a stocks and shares ISA, you will need to decide:

  1. If you want to receive investment advice or prefer to make your investment decisions on your own. Your financial adviser may also manage your portfolio for you.
  2. If you prefer to use an investment platform or buy directly from a provider.
  3. Whether you want to select the funds or shares to invest into yourself or to have these chosen on your behalf by the platform or provider.
  4. If you want to use a traditional approach to manage your stocks and shares in your ISA or if you want to automate this through a robo-adviser.
    The way you choose to invest can be based on the minimum investment amounts required, the fees to use a service, the type of investments available and the flexibility you would like to manage your funds.

Learn more about investment platforms

Read our guide to investment platforms for more information. 

What are DIY investment platforms?

DIY investment platforms allow you to select and directly manage your stocks and shares portfolio. You will need to be an experienced investor to use a DIY platform and be clear on what you want your investments to achieve over what time period. Researching your investment is critical and you will need to carefully track changes in your portfolio.
A platform will offer you information but it will not direct you to certain funds or shares to invest with. However, they do generally charge lower fees than a managed investment. Before you transfer your ISA, be sure to check for any exit fees.

Transferring a stocks and shares ISA

You can only invest up to £20,000 of new money into one active investment ISA per tax year. You can transfer-in money from savings made into cash and stocks and shares ISAs from previous tax years into your new ISA (as long as the product rules allow this). 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.

Reasons to transfer your stocks and shares ISA

  1. Lower platform fees – stocks and shares ISA platforms usually charge a management or account fee.
  2. Lower trading fees – this is a fee for each time you buy or sell a share in your stocks and shares ISA.
  3. No or lower custody fees – some platforms do not charge a fee to hold funds in your account.
  4. Easier to use and better customer service – you may want different features from your platform or have access to telephone support, for example.
  5. Better research functionality – some platforms will offer share research as part of their service and investors may find one platform outperforms another on the information available.
  6. Wider investment choice – the number of funds and investments available from the platform.
  7. Overseas investing – investing in shares from outside the UK can incur currency conversion fees and/or additional fees to those mentioned above.

You will need to be clear on what choices are important to you and, based on your portfolio and investment choices, which will offer the greatest value to you across fees, investment choice and service.

The stocks and shares ISA transfer process

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. This only works if the new provider offers the same funds as your existing one. If not, you will need to do a cash transfer.
  • Cash transfers. This option involves your current provider selling your investments and the proceeds being sent to your new provider as uninvested cash, effectively allowing you to start the process over and make new investment decisions in the new ISA. 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.

Cash ISA transfers

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.

Investing for income or growth

You can choose a stocks and shares ISA that provides an income or one that is designed to accumulate in value. Those for income will show the term “Inc”, whereas those funds used to grow your ISA are denoted by the term “Acc”.

Stocks and shares ISA rules

You can invest up to £20,000 in the current 2021/22 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 above) 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!

The risks explained

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.

Risk number one – you might get back less than you put in.

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.

Risk number two – different investments have differing levels of volatility

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.

Risk number three – past performance is no guarantee of future returns

Past performance should never be seen as an indicator of future returns – even the best-performing stocks and shares ISA can disappoint. 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.
Ultimately, remember that this kind of account will always be riskier than a cash ISA; a stocks and shares ISA has your capital at risk with an uncertain return, while a cash ISA protects your capital for an agreed rate of interest. Stocks and shares investments should be viewed as a long-term investment to counter the risks of stock market volatility.
However, cash ISAs also come with the risk of your returns not keeping up with inflation. Current low interest rates in the cash market mean many accounts if not now, but over time will struggle to keep up with inflation – effectively eroding the value of your cash.
Tax advantages will depend on your circumstances and may change in the future.

Are stocks and shares ISAs protected?

Stocks and shares ISAs are protected by the Financial Services Compensation Scheme (FSCS) up to the first £85,000 invested. The investment would need to be with an authorised provider to qualify. This only protects your funds if the ISA provider goes bust. If your investment loses value because of market movements, this is your loss to bear.

Is my capital at risk?

Your capital is at risk when investing in a stocks and shares ISA, this means your ISA could be worth less than the total you have paid in. Your investment could go up or down over time and historic performance should not be used as an assessment of future performance.

Find a financial adviser near you

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Should I open a cash ISA and a stocks and shares ISA?

This depends on your attitude to risk, and the phrase “don't put all your eggs in one basket” is 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

1. Platform fees – these may be quoted as an annual management charge or a custody charge and can be either a flat fee or a percentage of the value of your funds/investments.
2. Trading fees – these will apply each time you buy or sell investments and can be either a flat fee or a percentage of the transaction. Some platforms will offer free of charge or a limited number of free trades, while others will cap the total amount you will pay.
3. Buying shares with companies outside of the UK – a separate charging structure may apply in respect of non-UK investments.
4. Exit fees – may apply if you decide to transfer from one platform or provider to another.

Some platforms or providers may also require you to make a minimum monthly payment into your account.You should make sure your stocks and shares ISA is performing and that any fees are not eating into your capital.


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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.

Stocks and shares ISA

Cash ISA

Provides access to potential growth in the stock market

Interest added every year or more frequently

The value of your investment can fall as well rise

Original deposit guaranteed to be returned

Should look to invest for five years or more

Better option for short-term saving

Wide range of investment options

No investment choice, but can choose fixed or variable rate

Withdrawals can take up to 10 days

Variable rate accounts can offer instant access; fixed rate accounts see funds locked away for up to seven years – access may be allowed but at a penalty

FSCS protection cover up to £85,000 per firm

FSCS protection cover up to £85,000 per firm

Be prepared to invest for the longer-term

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 stocks and shares ISA is a higher-risk home for your money, with the returns based on the performance of the specific shares or 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.

What are the tax and inheritance implications?

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, including dividends if held within an ISA. ISAs will form part of your estate on death so could be subject to inheritance tax.

Can I withdraw money from my stocks and shares ISA?

Yes, unless there is a condition to the contrary you will be able to withdraw money from your stocks and shares ISA whenever you want.

There are not usually penalties for withdrawal from S&S ISAs. But there may be fees to pay e.g. to sell shares from the ISA.

Also, there may be restrictions on withdrawing from certain types of funds due to market conditions at the time, e.g. currently a number of property funds are not accepting withdrawals.

If a withdrawal is made when the value of the investment has gone down a loss will be made.
In addition, money withdrawn from your stocks and shares ISA and the reinvest it within the same tax year this will count toward your annual ISA limit.

Can I have more than one stocks and shares ISA?

You are only allowed one stocks and shares ISA per tax year. While you can also open a cash ISA during the same period you must not exceed the annual ISA allowance in total.

Pros and cons of stocks and shares 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.
  • If your funds underperform, you do run the risk of losing money.
  • FSCS protection only covers you up to £85,000 per firm. The FSCS does not protect against investment losses, only if your investment provider goes bust.

Moneyfacts tip

Moneyfacts tip Michelle Monck

Make sure you carefully review the performance of your stocks and shares ISA, including the impact of fees. If your funds are not performing, then you may want to transfer to an alternative – make sure you understand the exit fees involved.

Best Stocks and Shares ISA rates

This is a basic guide to stocks and 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.

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