Stocks and shares ISAs

Rule changes mean you can now open as many stocks and shares ISAs as you like each tax year. You can also open multiple cash ISAs or innovative finance ISAs in the same tax year but you’ll have to split your annual £20,000 ISA allowance between the different types of account. You are allowed to retain existing ISAs from previous years.

Yes, you can transfer shares between trading accounts in two main ways: in specie or as cash. 

An in specie (or stock) transfer moves your investments in their existing form – such as shares, funds or ETFs – without selling them. This lets you avoid being out of the market during the transfer, though it can take several weeks and not all assets may be eligible. 

Alternatively, you can transfer as cash – by selling your investments in the original account, moving the proceeds to the new provider, and then reinvesting. This is often faster and gives you flexibility to rebalance your portfolio, but you may miss out on market movements and could incur trading and exit fees. 

No, the ISA allowance is capped at £20,000 for the current tax year. If you don’t use it by April 5, it expires and is lost. You’ll have a new £20,000 ISA allowance for the next tax year. 

Yes, as with all investments, the value of what you hold can go down as well as up. Historically over the long term, the stock market has outperformed savings accounts. This is why it’s normally advised that you invest in a stocks and shares ISA over the long term.

The length of time you invest is a matter of personal choice and comes down to individual circumstances and preference. Typically, investing for the long term and diversifying your investments gives you more chance to make better returns and ride out any downturns in the stock market.

Investing in stocks and shares is relatively straightforward. There are a few ways you can do it depending on how hands-on you want to be with your investments. Our guide on How to invest in the stock market gives more information.

When you buy shares, you effectively own a small slice of the company you’re investing in.

This depends on many factors, such as how much research you want to do or your knowledge of specific sectors you may want to invest in. Experienced investors may choose to pick stocks themselves. Alternatively, you could opt to have your ISA managed by a fund manager. You’re likely to be charged slightly more for this, but you have a dedicated expert trying to optimise your returns. 

It’s not certain that your stocks and shares ISA will perform better than a savings account, but over the long term this has historically proved to be the case. All investments are different though, so it depends when and where you invest compared to the returns you might receive with a savings account.

A flexible ISA lets you take money out and put it back in within the same tax year without affecting your annual ISA allowance. So if you withdraw £5,000 and then later reinvest it, it won’t count twice toward your £20,000 limit. 

An inflexible ISA doesn’t give you this benefit. If you withdraw money, it still counts toward your annual allowance – even if you pay it back in later. That means once it’s out, it stays out for good (as far as that year’s limit goes). 

Not all stocks and shares ISAs offer flexibility, so check with your provider if that feature matters to you.