How To Open An ISA

Opening a savings or stocks and shares ISA (Individual Savings Account) is generally a smart move. Within these accounts, all capital gains, dividends, and interest are tax-free. 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

Opening an ISA is a relatively straightforward process.

Here are the main steps involved.

ISA Type

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

• A Stocks and Shares ISA
• A Cash ISA
• A Lifetime ISA (if eligible)
• An Innovative Finance ISA
• A Junior ISA (for your child)

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.

Provider

Once you have determined what type of ISA you want to open, it’s time to choose a provider.

Now, 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.

Apply

When you have chosen a provider, 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.

Fund

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:

• Banks such as HSBC, Lloyds, and Santander
• Investment platforms such as Hargreaves Lansdown, AJ Bell, and Interactive Investor
• Digital banks such as Monzo, Marcus, and smile
• 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.

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

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 on offer – 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 offered – 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.