4 simple steps to opening an ISA for the best returns

Opening a stocks and shares ISA (Individual Savings Account) generally gives you the best returns because your savings are linked to the stock market instead of just interest rates. When you open an ISA account, all capital gains, dividends, and interest are tax-free which can help make you more money because you don’t have to pay tax on your profits.

If you are interested in opening an ISA but not sure where to start? This guide will walk you through the process of opening a stocks and shares ISA.

How to open an ISA account in 2025

Opening an ISA is a relatively straightforward process and you have until the 5th April 2025 to invest last years ISA allowance, which resets on the 6th April 2025.

Here are the main steps involved.

1. Choose An ISA Type

The first step is to determine what type of ISA you want to open. Your options are:

• A stocks and shares ISA – invest in the stock market for potentially the best returns
• A cash ISA – high-interest paying savings accounts
• A lifetime ISA – get a 25% top up from the Government for buying your first house or retirement
• An innovative finance ISA – higher risk, higher interest paying
• A junior ISA – start investing for your child for when they turn 18

Here, you should give some thought to your financial goals and investment strategy. For example, if your goal is to build wealth over the long term, a Stocks and Shares ISA may be more appropriate than a Cash ISA.

2. Choose An ISA Provider

There are many different ISA providers today and they all have their advantages and disadvantages. For example, some offer more investment options than others while some have lower fees than others.

When choosing a provider, it can help to read some reviews. You can find plenty of ISA provider reviews right here at Good Money Guide.

3. Apply For The ISA

The next step is to go to the provider’s website and apply to open an ISA account.

At this stage of the process, it’s likely that you will have to provide the ISA provider with some personal information including your:

• Full name (you may have to provide proof of identity)
• Date of birth
• Residential address
• National Insurance number
• Email address
• Bank details / debit card number

Often, ISA accounts are opened instantly. However, sometimes the provider needs to run additional verification checks, and these can take a few days.

4. Fund The ISA

Once your ISA account is open, the final step is to fund it. You can usually do this instantly with your debit card.

Who can I open an ISA with?

Today, you can open an ISA with a wide range of companies, including:

• High Street Banks such as HSBC, Lloyds, and Santander (although these don’t offer great interest rates)
• Investment platforms such as Hargreaves Lansdown, AJ Bell, and Interactive Investor (great for long term ISA investing)
• Digital banks such as Monzo, Marcus, and smile (easy to open and competitive rates)
• FinTech companies such as Moneybox, Wealthify, and Nutmeg

You can find reviews of a lot of these ISA providers here at Good Money Guide. Every year, we review and compare ISA providers and give awards to the best providers.

When can I open a new ISA?

You can open a new ISA whenever you want to, but you have to allocate your ISA allowance before or after the 5th April each year..

However, you can only open and contribute to one of each type of ISA per tax year.

We have provided comparison tables of the best types of ISA accounts that you can open in 2025

• Stocks and shares ISAs – for investing and potentially getting better returns
• Cash ISA – high-paying interest-rate accounts that are not as risky as investing

Can I open more than one ISA?

Yes. There is no limit as to the number of ISAs you are allowed to have.

However, you can only pay into one of each type of ISA in each tax year.

And the total amount you put in across all ISAs must not exceed the annual ISA allowance of £20,000.

Can I close an ISA and open another in the same year?

Yes, you can. However, the total amount you contribute to all ISAs for the year must not exceed the annual ISA allowance of £20,000.

What to consider when opening a stocks and shares ISA

When choosing a stocks and shares ISA provider, there are a number of things to consider including:

• The range of investment options – Some ISA providers offer more investment options than others. For example, some offer access to a wide range of investments including domestic and international shares, investment trusts, funds, ETFs, and bonds. Others, however, only offer access to certain asset classes or products.
• Fee structures – Every ISA provider has a different fee structure. Fees and charges to consider include annual custody charges, entry and exit fees, trading commissions, and FX charges.
• Platform design – Some Stocks and Shares ISAs (such as those offered by Hargreaves Lansdown and Interactive Investor) are designed for do-it-yourself (DIY) investors. Others (like those offered by Nutmeg and Wealthify) are more aimed at beginner investors or those who don’t want the hassle of managing their own money.
• Research and investment tools – Some ISA providers offer a range of features designed to help you make investment decisions. Others, however, just offer basic trading and investing services.
• User-friendliness and reliability – Ideally, you want a platform that is well laid out, easy to use, and can be accessed via an app so that you can monitor your account and place trades on the go. You also want a platform that is reliable and always available.
• Customer service levels – Some investment providers are better than others when it comes to providing support. Service and support can be important, particularly if you are new to investing.