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Stocks and shares ISAs

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freE of TAX 

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    View ISAs at a glance with details such as minimum investment and any fees

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    See options from our panel of leading providers, so you can easily compare 

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    When you’ve made your decision simply click through to open your account online 

What is a stocks and shares ISA?

A stocks and shares ISA is a tax-free investment where your money is invested in the stock market through funds, bonds or shares in individual companies. You can only open one stocks and shares ISA each tax year.

It is different to a cash ISA, which is also tax free but pays interest on your savings.

You can save up to £20,000 each tax year in a stocks and shares ISA. While there is the potential to make good returns, your investment can also fall in value (so you could end up with less than you put in). It’s why it’s often recommended you should invest for the long term to ride out any bumps.

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What are the different types of investment ISAs?

There are different types of stocks and shares ISA to suit different needs.

  • Self-select ISAs

    You choose exactly which stocks or investment funds you want to buy and sell, and manage your own portfolio. Can be good for experienced investors. Take into account the charges, such as fund charges, trading charges and exit fees.

  • Managed stocks and shares ISAs

    The ISA provider manages your investment at a risk level that you choose. You will usually pay more for this service because the fund advisers are doing the work for you. There are various service levels from investment advisers to robo-advisers.

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

A stocks and shares ISA is a tax-free wrapper that can be put around a wide range of different investment products or assets, such as:

  • 1

    Individual stocks and shares

    Where you purchase a small slice of a single company and look to make a return as the company’s value rises

  • 2

    Unit trusts and investment trusts

    A form of collective investment. The pooled money is invested in a portfolio of assets. An investment trust has a fixed number of shares

  • 3

    Exchange-traded funds (ETFs)

    An investment fund traded on stock exchanges. ETFs tend to track particular markets or indices and can often be low cost investments

  • 4

    Government or corporate bonds

    You lend money to the government or a corporation when you invest in a bond with the promise that it will be repaid with interest when the bond matures

What are the advantages and disadvantages of stocks and shares ISAs?

Weigh up the pros and cons of investing in a stocks and shares ISA...

  • Tick

    Advantages

    • You investment ISA has the potential to grow faster than a cash ISA over time

    • You’ll have the choice of managing your own portfolio or having it managed on your behalf

    • Invest in companies or areas you believe will grow or have the right social and ethical values 

  • Cross

    Disadvantages

    • Investing is not without risk and your Isa could go down as well as up in value

    • Management fees can be high and eat into your profits

    • Likely not to be suitable for short term investors because of market volatility

How to choose the best stocks and shares ISA for you

When selecting the right investment ISA for your needs there are a range of things to consider, including:

  • Your view of risk

    Different investment ISAs can offer different levels of risk – or the option for you to choose your own underlying assets. Make sure you’re comfortable with where your money is being invested and you fully understand the risks.

  • Managing your investment

    Decide how hands-on or off you want to be with your stocks and shares ISA. Using a professional adviser or investment platform will come with additional fees, but you might benefit from their investment expertise 

  • Fees and charges

    Check what you’ll be paying in upfront fees, plus any ongoing management charges. If you’re looking to transfer an existing stocks and shares ISA into your new account, consider the transfer fees. There might also be a time lag involved.

  • Customer service

    Find out how the provider will interact with you and how and when they’ll be available should you need to contact them. See what others think of the providers by checking out online reviews of their services

What are the rules on investment ISAs?

Tax-free stocks and shares ISAs are governed by a number of rules. These include:

  • Maximum annual investment - save up to £20,000 tax-free in an ISA each tax year. This money can be invested entirely in a stocks and shares ISA, cash ISA, or split between the two

  • Deadline for investing - the end of the tax year is April 5. You must use your annual ISA allowance by then or lose it

  • One account per year - you can only open one new stocks and shares ISA account each tax year. But you can also open a cash ISA and retain existing ISA accounts

  • Frequency of investing - make a lump sum deposit, regular or occasional contributions throughout the tax year

  • Reinvesting - if you cash in some or all of your ISA, you can reinvest this money into another ISA, but only to the extent that you have unused available ISA allowances

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How to compare stocks and shares ISAs with MoneySuperMarket

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You’ll need to be aged 18 or over and a UK resident for tax purposes.

You can only open one stocks and shares ISA each tax year. You can also open a cash ISA in the same tax year but you’ll have to split your annual £20,000 ISA allowance between the two types of account. You are allowed to retain existing ISAs, so you hold more than one at any given time. 

There are two main ways to transfer stocks and investments between trading accounts, either via an ‘in specie’ transfer or as cash.

An ‘in specie’ transfer is known as a stock transfer - that means transferring your assets in their current form whether it’s stocks and shares or unit trusts and mutual funds.

Stock transfers allow you to keep hold of your investments alongside any changes in value. The downside is that it can take up to four weeks to transfer your holdings.

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.