What is a stocks and shares ISA?
Key takeaways
A stocks and shares ISA (S&S ISA) is a tax-efficient investment account that allows you to invest in funds, shares, stocks and bonds
Investments can fall as well as rise, so you could get back less than you put in
You can save up to £20,000 across ISAs in the 2026/27 tax year
ISA tax benefits can shelter investment income and gains from income tax and Capital Gains Tax, but they do not generally cover Inheritance Tax or stamp duty
What is a stocks and shares ISA?
A stocks and shares ISA (S&S ISA), sometimes called an investment ISA, is an investment account that lets you invest in a range of assets, such as shares, funds and bonds.
ISA stands for Individual Savings Account. An ISA is a tax-efficient wrapper around your savings or investments. You can invest up to your annual ISA allowance without paying Income Tax or Capital Gains Tax on returns within the ISA.
It's important to remember that when you invest your money, there is a risk that your investment could fall as well as rise.
By carrying out an ISA transfer, you can move money between different types of ISA, for example from a cash ISA to a stocks and shares ISA, without using up your annual ISA allowance, provided you follow the ISA transfer rules.
What should I consider before opening a stocks and shares ISA?
Here are some things to think about before you open a stocks and shares ISA:
Value of your investment: With a stocks and shares ISA, your investment can fall as well as increase. You could get back less than you put in, so you need to be comfortable with taking some investment risk
Your investment timeframe: Stocks and shares ISAs are generally better suited to long-term investing, and you should ideally be prepared to leave your money invested for at least five years
Fees and charges: Stocks and shares ISAs can have fund fees and charges, such as platform, management and dealing fees. These will reduce your returns
Your individual circumstances: Think about your financial goals, how much you can afford to invest and how much you could afford to lose. A financial adviser can help you plan your finances for the long term.
How do stocks and shares ISAs work?
Here is how stocks and shares ISAs work:
Open an ISA with a provider
You can open an ISA via:
an investment platform such as Hargreaves Lansdown, AJ Bell or Interactive Investor
a robo-adviser such as Nutmeg or Moneybox
a direct fund manager such as Vanguard or Fidelity
There are two main investment options:
Self-select stocks and shares ISA: You choose and manage your own investments, depending on your goals and attitude to risk
Managed or robo stocks and shares ISA: An investment manager or algorithm chooses and manages investments for you
Charges vary depending on the ISA provider and the investments you choose. You may pay charges for managing the account, buying and selling investments and other services.
Contribute funds
The annual ISA allowance is £20,000 for the 2026/27 tax year.
You can invest a lump sum or make regular monthly payments. You can split your £20,000 allowance across different types of ISA, subject to the ISA rules.
You cannot carry unused annual ISA allowance into the next tax year.
Invest in a range of assets
Within a stocks and shares ISA, you can buy a range of investments, including:
Individual UK or international shares
Funds, such as unit trusts or OEICs
ETFs (exchange-traded funds)
Corporate or government bonds
Investment trusts
Some platforms also offer themed portfolios or ethical investments.
Your investments grow tax-efficiently
One of the main benefits of a stocks and shares ISA is that you do not normally pay:
Capital Gains Tax on profits from selling investments held in the ISA
Income Tax on interest from qualifying investments held in the ISA
Dividend Tax on dividends from investments held in the ISA
The tax advantages apply to investments held within the ISA. They do not mean the underlying investments are free from every type of tax or charge.
What can I invest in with a Stocks and Shares ISA?
There are two broad ways you can manage a stocks and shares ISA:
Self-select ISA: If you want to be hands-on with your investment, a self-select ISA could be suitable. You choose the investments you make and manage them yourself. Because the market can be unpredictable and your investment could decrease in value, it's important to research investments thoroughly before investing.
Managed stocks and shares ISA: This is where an investment manager or automated investment service looks after the investments on your behalf. There is usually a fee for this service, but it can be an option if you don't want to choose and manage individual investments yourself.
What can I invest in with a Stocks and Shares ISA?
You can include a wide range of investments in a stocks and shares ISA in the UK. These can include:
Individual stocks and shares: Units of ownership in a company. Their value can rise or fall depending on the company's performance and wider market conditions
Unit trusts and OEICs: Funds that pool money from many investors and use it to buy a range of investments
Investment trusts: Companies listed on a stock exchange that invest in a portfolio of assets
Exchange-traded funds (ETFs): Funds that can be bought and sold on a stock exchange and usually track an index, sector or other group of investments
Government or corporate bonds: Loans to governments or companies, which generally pay interest to investors
Not every investment is eligible for an ISA. You generally cannot use a stocks and shares ISA to hold things such as direct property, physical commodities or unlisted investments that do not meet the ISA eligibility rules.
The investments available will depend on the provider you choose, so check what you can hold before opening an account.
What is the ISA allowance for the 2026/27 tax year?
You can save or invest up to £20,000 across ISAs in the 2026/27 tax year.
For the 2026/27 tax year, the £20,000 annual ISA allowance can be used for cash ISAs, stocks and shares ISAs, Lifetime ISAs and Innovative Finance ISAs, subject to the individual limits and eligibility rules for each type.
From 6 April 2027, the annual cash ISA limit will fall to £12,000 for people aged under 65, while the overall ISA allowance will remain £20,000. The cash ISA limit will remain £20,000 for people aged 65 and over.
You can open and pay into multiple ISAs in the same tax year, provided your total subscriptions do not exceed the relevant annual allowances.
You could also use a Lifetime ISA if you are eligible. You can pay up to £4,000 a year into a Lifetime ISA and receive a 25% Government bonus, subject to the Lifetime ISA rules.
You generally need to be aged 18 or over and a UK resident to open a stocks and shares ISA. Junior ISAs are available for eligible under-18s and can be opened by a parent or guardian for under-16s. 16 and 17-year-olds can open their own Junior ISAs.
ISA rules mean you cannot carry your unused annual allowance into the next tax year.
Will I have to pay tax on my returns from an investment ISA?
You don't normally have to pay Income Tax, Dividend Tax or Capital Gains Tax on returns from investments held within a stocks and shares ISA.
However, a stocks and shares ISA does not make the underlying investments exempt from every tax. For example, ISA tax benefits do not generally cover Inheritance Tax, and stamp duty may still apply when buying certain shares.
If you move existing investments into a stocks and shares ISA, you generally cannot simply transfer them into the ISA without selling them first. This is sometimes known as a 'bed and ISA'.
Selling investments outside an ISA could trigger Capital Gains Tax if you make a taxable gain, depending on your circumstances and available allowances. Your provider can explain how its ISA transfer or bed-and-ISA process works.
Is my money safe in a stocks & shares ISA?
If your ISA provider fails, eligible investments may be protected by the Financial Services Compensation Scheme (FSCS), subject to the investment protection rules and limits. This protection is different from the FSCS deposit protection that covers eligible cash savings held with banks and building societies.
FSCS protection does not protect you from investment losses. If the value of shares, funds or other investments falls, you remain responsible for that loss.
So, while the ISA wrapper provides valuable tax benefits, it does not guarantee that your money will grow or that you will get back what you invested.
You should check that your provider is authorised and understand what FSCS protection applies to your particular investments.
Other useful guides
If you want to be in-the-know with investing, we’ve got a range of articles you can read:
Find a stocks and shares ISA with MoneySuperMarket
Looking for the appropriate stocks and shares ISA can seem overwhelming, especially if you're new to investing. MoneySuperMarket can help you find an investment ISA, and you can view a range of stocks and shares ISAs quickly and easily with us.
We'll show you details about the different accounts, the minimum deposit you'll need to invest and the management fees and charges that might apply.
If you are looking to switch your ISA funds check out our guide for more information.
Frequently asked questions
What are stocks and shares?
A stock or share represents a portion of ownership in a company. For example, you could own shares in companies such as Meta or Alphabet.
You can buy shares in individual companies, while funds allow you to invest in a collection of assets without having to choose each one individually.
Can I transfer my stocks and shares ISA?
Yes, you can transfer your stocks and shares ISA in two ways.
With an ‘in specie’ transfer, your investments are transferred to your new provider without being sold, where the new provider accepts them.
With a ‘cash transfer’, your investments are sold and the cash is transferred to your new provider, which then reinvests it according to your instructions.
You should use the formal ISA transfer process rather than withdrawing the money yourself, as taking money out and paying it into another ISA could use up your annual ISA allowance.
How many stocks and shares ISAs can I open?
You can open and pay into multiple stocks and shares ISAs in the same tax year.
Since April 2024, you're no longer limited to paying into just one stocks and shares ISA each year. The main rule is that your total contributions across all your ISAs must stay within your annual ISA allowance, which is currently £20,000 per tax year.
This allowance can be split across different ISAs, including cash ISAs and stocks and shares ISAs.
Can I open a stocks and shares ISA jointly?
No. An ISA is held in one person's name and cannot be jointly owned.
You can have your own ISA while your spouse, civil partner or another person has a separate ISA in their own name, but you cannot combine your ISA allowances or hold one jointly.
Can I withdraw my money from a stocks and shares ISA?
Yes, you can usually withdraw money from a stocks and shares ISA, although how quickly you can access it will depend on the provider and the investments you hold.
Selling investments may take time, and the value of your investments may have fallen when you withdraw.
Withdrawing money does not automatically restore your ISA allowance. However, if you have a flexible ISA, you may be able to withdraw and replace money within the same tax year without affecting your allowance, subject to the provider's rules.
What happens to my stocks and shares ISA if I die?
A stocks and shares ISA is an investment account where the return you get depends on the value of the assets you buy. This means the value can go up and down, and you could get back less than you put in.
In contrast, a cash ISA is a tax-free savings account where you'll receive interest on your balance.
As such, there is more investment risk with a stocks and shares ISA, but also the potential for higher returns over the long term.
What is the difference between a stocks and shares ISA and a cash ISA?
A stocks and shares ISA is an investment where the return you get depends on the value of the assets you buy. This means it is variable and can go up and down.
In contrast, a cash ISA is a tax-free savings account, where you’ll receive interest on your balance. As such, there is more risk to a stocks and shares ISA, but also the chance of better returns.
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