Find our best stocks and shares ISAs

Make the most of your ISA allowance with a stocks and shares ISA

Discover how your money could grow faster in a stocks and shares ISA and take a look at some of the best deals on the market.

Compare our best stocks and shares ISAs

Check out fund choices and investment requirements for leading ISA providers at a glance
Scottish FriendlyHargreaves LansdownAJ Bell YouinvestInteractive InvestorWesleyan Assurance SocietyScottish FriendlyHargreaves LansdownAJ Bell YouinvestInteractive InvestorWesleyan Assurance Society
Stocks and shares ISAs put your capital at risk, and you may get back less than you originally invested.
Last updated
May 16th, 2024

What is a stocks and shares ISA?

A stocks and shares ISA is a way of buying and selling shares in companies and other assets while escaping most forms of tax on any growth.

It is also known as an investment ISA.

Every adult has a £20,000 ISA allowance each tax year and this can be put into your stocks and shares ISA. You also won't pay dividend, capital gains and income tax on any profits or interest you earn from the investments held within a stocks and shares ISA.

You can either use your entire ISA allowance for a stocks and shares ISA, or you can split it between different types of ISAs.

If you have long-term savings goals, a stocks and shares ISA might offer you a better returns than a cash ISA, although your capital is at risk.

People with stocks and shares ISAs[1]
3.9million

Who can open a stocks and shares ISA?

To open a stocks and shares ISA you need to be at least 18 years old and a UK resident. You also can’t open a stocks and shares ISA for someone else - you have to do it yourself.

You can pay into more than one stocks and shares ISA during the tax year and you can have a cash ISAlifetime ISA and an innovative finance ISA open as well, provided you don't pay in more than £20,000 across all of them in the same year.

You can also open a new stocks and shares ISA each tax year and you don't need to close old ones to open a new one.

What are the different types of stocks and shares ISAs?

Self-selected stocks and shares ISAs

Self-selected stocks and shares ISAs

This type of stocks and shares ISA is best for people who like control - it lets you choose exactly what shares, bonds or other assets to invest in, when to sell them and what to buy with your ISA allowance.

Managed stocks and shares ISAs

Managed stocks and shares ISAs

This type of investment ISA does the work for you. You answer a few questions about how comfortable you are with risk and what you want to get out of the product, decide how much to put in, then a professional does all the work of picking shares for you.

What are the different types of stocks and shares ISAs?

Self-selected stocks and shares ISAs

Self-selected stocks and shares ISAs

This type of stocks and shares ISA is best for people who like control - it lets you choose exactly what shares, bonds or other assets to invest in, when to sell them and what to buy with your ISA allowance.

Managed stocks and shares ISAs

Managed stocks and shares ISAs

This type of investment ISA does the work for you. You answer a few questions about how comfortable you are with risk and what you want to get out of the product, decide how much to put in, then a professional does all the work of picking shares for you.

Our best stocks and shares ISA deals

Our editors pick these deals by weighing several factors such as the minimum initial, lump sump and monthly deposit, as well as the number of funds available to invest in.

Editor’s pick
Our self select, lowest fee, investment ISA
Card
AJ Bell Stocks and Shares ISA
Invest from
£500 lump sum or £25 a month
You can invest in
Over 2,000 funds

ISA rules apply. Capital at risk.

Show Details
Eligibility
Permanent UK Resident
YES
Minimum Initial Deposit
£500
Minimum Monthly Investment
£25
Minimum Lump Sum Stocks & Shares ISA Investment
£500

This stocks and share ISA allows you to grow your ISA gradually by putting in as little as £25 a month, or invest a lump sum. You can choose pick your own investments, or choose from AJ Bell's ready-made portfolios. They also offer a handy mobile app so you can track your investment from where ever you are.

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Senior Personal Finance Editor
Editor’s pick
Our fully managed, lowest fee, investment ISA
Card
Hargreaves Lansdown Stocks and Shares ISA
Invest from
£100 lump sum or £25 a month
You can invest in
Over 3,000 funds

Capital at risk.

Show Details
Eligibility
Permanent UK Resident
YES
Minimum Initial Deposit
£100
Minimum Monthly Investment
£25
Minimum Lump Sum Stocks & Shares ISA Investment
£100

This stocks and shares ISA makes it easy to check your investments with its app or via its website. You can also pick your own investments or choose one of HL's ready-made portfolios.

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savings expert
Editor’s pick
Our fully managed, lowest fee, investment ISA
Card
Wesleyan With Profits Stocks and Shares ISA
Invest from
£1,000 lump sum or £50 a month
You can invest in
1 fund

Capital at risk.

Show Details
Eligibility
Permanent UK Resident
YES
Minimum Initial Deposit
£1,000
Minimum Monthly Investment
£50
Minimum Lump Sum Stocks & Shares ISA Investment
£1,000

With just one fund to choose, Wesleyan manage all your money for you for just 1.2% in charges a year. There's a not insignificant initial charge of up to 3%, but you could get an Amazon voucher if you open one before May 31, 2024.

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Senior Editor, Personal Finance
Stocks and shares ISAs put your capital at risk, and you may get back less than you originally invested.

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What can you invest in with a stocks and shares ISA?

A stocks and shares ISA lets you put money in more than just the stock market. Here's what you're allowed to invest in tax free.

Stocks or shares

Shares are essentially slices of ownership in a given company. The value of the share rises and falls based on what the overall value of the company is. Some companies also pay a slice of any profit the company makes (known as a dividend) for each share you own.

Investment funds

A fund is when a group of people pool their cash with the goal of making money. A fund manager then uses that cash to buy and sell investments on their behalf - with a specific aim in mind. For example, the goal might be steady growth, making money from technology firms or just looking at companies from a certain sector or country.

Corporate and government bonds

Bonds are what a company or government issues when it needs a loan. They pay a fixed rate of interest (known as the coupon) for a set period, then at the end of that the capital is paid to whoever is holding them at the time. In the interim they can be traded between investors for whatever they think they are worth.

Unit trusts

A unit trust is a type of fund - where money is pooled by investors then managed by a professional. You buy 'units' of the larger fund, then can sell them on later. Unit trusts are open-ended grouped investment products, which is a complicated way of saying that there is no limit to how many people can invest in one of them or how much money can be invested.

Exchange-traded funds (ETFs)

Exchange-traded funds (ETFs) are a simple way of getting access to something else. For example, an ETF might contain all the shares in the FTSE100 index - so its value will rise and fall in the same way the FTSE100 does. Or it could be filled with shares in car manufacturers, government bonds or represent gold prices. You can buy and sell ETF shares like a normal stock.

What do you need to consider when choosing a stocks and shares ISA?

There are three main things to consider when choosing a stocks and shares ISA: control, choice and cost.

The first question you need to ask yourself is: How much control do I want?

If you don't want to choose specific stocks and shares yourself, you can get someone to do it all for you, or choose an option that greatly simplifies the process.

If you do want to choose your own investments, you need to look at how much of the market your chosen provider covers.

This can be anything from a few in-house funds all the way through to complete coverage of almost every stock, share, bond and fund available worldwide.

Finally, you need to think about costs.

Costs with stocks and shares ISAs come in the form of fees - trading fees, platform fees and management fees.

Getting someone to take full control of your money and make investment decisions on your behalf almost always costs more in fees than doing at least some of the work yourself.

However, doing all the work yourself also costs.

That's because as well as a platform fee, charged for holding your money and investments, you can also be hit with trading fees every time you buy or sell a share, fund or bond.

In the middle there are cheaper options, but they normally mean giving up either choice or control. For example, a tracker fund is generally cheaper than a managed fund, but it can't react to changes in the market the way a managed fund can.

How to invest in a stocks and shares ISA

Once you've decided to open an investment ISA, you need to decide what to do with the money you put in there.

If you've decided to go for a managed ISA, you simply need to answer a few questions about your savings goals and how comfortable you are with risk - then transfer some cash to them.

If you've decided to take more control of your money, you'll need to transfer some money to your provider - then start buying and selling individual shares, funds and more to hold in your portfolio yourself.

Lots of ISA providers will offer tips, tools and research on the various funds they offer to help you choose between them - and some will even offer model portfolios for you to copy.

Pros and cons

You could see your money grow faster than in a traditional savings account
Any returns are free from income tax, capital gains tax and dividend tax
Your capital is at risk if your investments fall in value
There is a £20,000 limit to what can be paid in each year

Benefits of investing in a stocks and shares ISA

Tax efficiency

Returns generated within a investment ISA, including capital gains and dividends, are tax-free, providing significant tax advantages compared to investing outside of an ISA wrapper.

Potential for higher returns

Investing in the financial markets through a investment ISA offers the potential for higher returns compared to cash savings accounts over the long term, although returns are not guaranteed.

Investment flexibility

Investment ISAs offer a wide range of investment options, allowing investors to create a diversified portfolio tailored to their risk tolerance and investment goals.

Compound growth

Reinvesting dividends and capital gains within a investment ISA can accelerate the growth of investments over time through the power of compounding.

Retirement planning

Stocks and Shares ISAs can be used as a tax-efficient vehicle for retirement savings, providing investors with the opportunity to build a substantial nest egg for their later years.

Risks of investing in a stocks and shares ISA

Market risk

Investing in the financial markets carries inherent risks, including the risk of capital loss due to market fluctuations, economic downturns, or geopolitical events.

Volatility

Investment ISAs are subject to market volatility, with the value of investments fluctuating over time. Investors should be prepared for short-term fluctuations and focus on long-term investment objectives.

Currency risk

Investing in international assets within a investment ISA exposes investors to currency risk, as fluctuations in exchange rates can impact the value of investments denominated in foreign currencies.

Inflation risk

Inflation erodes the purchasing power of money over time, potentially reducing the real value of investment returns. Investors should consider inflation risk when planning their investment strategy.

Liquidity risk

Some investments within a Investment ISA, such as certain types of bonds or real estate, may have limited liquidity, making it challenging to sell or exit positions quickly.

Stocks and shares ISAs offer a tax-efficient avenue for investors to navigate the complexities of the financial markets. In harnessing the power of compounding, disciplined investors can cultivate wealth over time, laying the groundwork for a secure financial future.

Alternatives to stocks and shares ISAs

Stocks and shares ISAs let you put money in the markets while escaping tax on returns, but they're not the only way to do this.

Pensions and lifetime ISAs also let you escape tax on the money you make from the markets - and come with added tax breaks on top.

However, they also come with age restrictions on when you can withdraw your money penalty free, or even at all, meaning they're best used for long-term savings.

On top of those two products, you also have a tax-free allowance for everything from savings interest to capital gains - meaning you need to earn a fair amount before the tax-free status of an ISA comes into effect.

But there are very few downsides to choosing a stocks and shares ISA compared to other ways of investing, with the same features available inside and outside of an ISA, so it makes sense to start there in most cases.

After all, while you might not pay tax on your returns now, if things go well you could find the extra protection that an ISA offers rather useful in a few years' time.

But if you're saving for the short term or don't want to risk your money in the hope of higher rewards, a simple savings account or cash ISA might be your best bet.

FAQs

Can I pay into multiple ISAs?

Yes, you can have as many ISAs as you want, but you can't exceed the £20,000 allowance. However, if you're under 40, you can only pay into one lifetime ISA. Find out more here

Can I have a stocks and shares ISA and a cash ISA?

Yes, you can have a stocks and shares ISA and a cash ISA. Actually, you can save into a cash ISA, innovative finance ISA and a stocks and shares ISA in each tax year, but only up to £20,000 between all three types.

Are stocks and shares ISAs covered by the Financial Services Compensation Scheme (FSCS)?

Yes, most ISAs, including stocks and shares ISAs are covered by the FSCS up to £85,000 per person, per institution. This means that in the unfortunate event that your ISA provider or fund manager were to go bust, you'd be covered up to that amount.

However, this does not mean that you are protected if the investments in your stocks and shares ISA were to lose value from fluctuations in the stock market.

Always be aware that stocks and shares ISAs put your capital at risk, and you may get back less than you originally invested.

How long should I keep my money in a stocks and shares ISA for?

In terms of how long you should invest for - investing is for the long-term. If you decide to start a stocks and shares ISA, it's a good idea to invest for at least five years if you can. That's so that any ups and downs in the market have time to even out, and you are far less likely to lose money.

How can I track the performance of my stocks and shares ISA?

You can track the performance of your stocks and shares ISA mostly online or you could also ask your financial advisor for a valuation if you invested through one.

Can I transfer my cash ISA into a stocks and shares ISA?

Yes, you can transfer a cash ISA into an investment ISA but only if the company accepts ISA transfers. There may also be charges for transferring into an investment ISA.

Is a good return guaranteed in a stocks and shares ISA?

No, a good return is not guaranteed in a stocks and shares ISA. You could lose money in an investment ISA due to the volatility of the stock market.

Can I get the 25% government bonus on a stocks and shares ISA?

You can get the 25% government bonus on up to £4,000 each year if you apply for a lifetime stocks and shares ISA. This means if you save £4,000, you'll receive £1,000 from the government. However, there are a few restrictions as this ISA has been created to help people get on the property ladder and save retirement. Visit our lifetime ISA page for more information.

What happens if I put more than £20,000 in an ISA?

If you contribute more than the annual ISA allowance into an ISA in a single tax year, the excess amount will not receive the tax advantages associated with an ISA. The additional funds beyond the £20,000 limit will be considered as regular savings or investments and will be taxed according to existing tax rules. You can choose to contact HMRC, or they will contact you, at the end of the year to charge taxes owed on the money.

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About the author

Lucinda O'Brien
Lucinda O'Brien has spent the past 10 years writing and editing content for regional and national titles. She applies her industry knowledge to ensure readers can make confident financial decisions.

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References

1. Gov.uk annual savings statistics: Individual Savings Accounts (ISAs) tables: June 2023