Best Stocks & Shares ISA Accounts 2022

What is the best stocks & shares ISA account?

A Stocks & Shares ISA is a tax-efficient investment account. When you invest within a Stocks & Shares ISA, all the capital gains and income generated from your investments are completely tax-free.

Stocks & Shares ISAs are available to UK residents aged 18 and over. For those under the age of 18, the Junior ISA is available. You can own multiple Stocks & Shares ISAs, however, you can only contribute to one per tax year.

The maximum amount that can be paid into a Stocks & Shares ISA per tax year is currently £20,000. This is the annual ISA allowance. The annual allowance covers all types of ISAs meaning that if you own different types of ISAs, you can only invest a total of £20,000 across them in any one tax year.

Stocks and Shares ISAs are offered by a number of providers but they are not all the same. For example, some allow you to invest in a wide range of assets. Others, however, only offer more limited, pre-packaged, investment options.

Stocks & Shares ISAs have been around in their current form since 2008. Before this, they were known as ‘Maxi ISAs.’ Prior to 1999, they were known as ‘Personal Equity Plans’ (PEPs).

The best stocks and shares ISA is one that:

• Allows you to build an investment portfolio that is in line with your financial goals and risk tolerance.
• Provides access to the assets you wish to invest in whether that’s shares, funds, investment trusts, exchange-traded funds (ETFs), or bonds.
• Suits your investment style. Some ISA providers cater to do-it-yourself (DIY) investors and provide all the tools investors need to manage their own portfolios. Other providers, however, offer managed accounts and products.
• Is easy to use and offers a good level of customer service.
• Enables you to access your money when you need it.
• Has competitive fees and charges, so you can get the best rate of return.
• Is regulated by the UK’s financial regulator, the Financial Conduct Authority (FCA), and provides protection under the Financial Services Compensation Scheme (FSCS).

Investors are often interested in finding out which Stocks & Shares ISAs offer the best returns. However, comparing the performance of different Stocks & Shares ISAs is difficult. This is due to the fact that returns from the investments within Stocks & Shares ISAs are uncertain and past performance is not an indicator of future performance. Unlike a Cash ISA, returns from a Stocks & Shares ISA are never guaranteed. Ultimately, it’s more important to focus on the range of investments offered by the ISA, as well as the fee structure, as these factors are the main determinants of an ISA’s return potential.

Why ISAs Are the Best Way to Invest

The advantages of investing within a Stocks and Shares ISA include:

• Tax efficiency. Within this type of ISA, all investment gains and income are completely tax-free. This is a valuable benefit. Over the long term, you could potentially save tens or even hundreds of thousands in tax by investing within a Stocks & Shares ISA.
• High returns, at least potentially. Through a Stocks & Shares ISA, you can gain access to a wide range of investments including shares, funds, investment trusts, ETFs, bonds, and more. Over the long term, these kinds of assets tend to generate much higher returns than cash savings. UK shares, for example, have returned around 5% per year in real terms (above inflation) over the long run, according to the Barclays Equity Gilt study.
• Flexibility. Stocks & Shares ISAs are generally very flexible. With this type of ISA, you can build an investment portfolio that matches your own financial goals and risk tolerance. You can also access your money at any time.

Disadvantages of stocks and shares ISAs

Stocks & Shares ISAs do have some disadvantages. Investors should be aware that:

• There are ISA contribution limits. You can only invest a maximum of £20,000 per tax year within this type of ISA. If you are looking to invest more than this, you will have to invest the excess capital in another type of investment account such as a general investment account or Self-Invested Personal Pension (SIPP). The annual ISA allowance cannot be rolled forward.
• You can lose money. A Stocks & Shares ISA doesn’t have a fixed return. Instead, its overall performance depends on how well the underlying investments perform. While assets such as shares, funds, and ETFs tend to generate strong returns over the long term, they can generate negative returns at times. So, there’s always the chance that your Stocks & Shares ISA could fall in value.
• There are fees to invest. Some fees that ISA providers charge include annual custody charges, trading commissions, FX fees on international investments, and exit fees. Fees and charges need to be considered carefully when comparing platforms as they can have a large negative impact on your investment returns over time.
• Withdrawals can impact your ISA allowance. In most cases, if you withdraw money and then put it back into the ISA in the same tax year, it will count towards your annual allowance. Some ISAs, however, do allow you to take money out and pay it back into the account in the same tax year without affecting your annual ISA allowance. These are known as ‘flexible ISAs.’
• There is no tax relief on contributions into a Stocks & Shares ISA.
• You cannot have a joint account.

Here is everything you need to know about stocks and shares ISAs in our ISAs explained piece.

How to Compare Investment ISA Platforms

When comparing investment ISA platforms, there are a number of things to consider including:

• The range of investment options each platform offers. 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.
• The fee structure of each platform. Every ISA provider has a different fee structure. This needs to be considered carefully because fees and charges can have a large impact on investment returns over time. Fees and charges to consider include annual custody charges, entry and exit fees, trading commissions, and FX charges. Some ISA providers offer fee calculators that allow you to compare fees. These can be useful when comparing platforms.
• The design of each platform. Some ISAs are designed for DIY investors. Others are designed for beginner investors or those who don’t want the hassle of managing their own investment portfolio.
• The research and investment tools offered by each platform. Some ISA providers offer a range of features designed to help you make investment decisions. Others, however, just offer basic trading and investing services.
• The user-friendliness and reliability of each ISA platform. 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.
• The customer service levels of each ISA provider. 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.
• The terms and conditions of each ISA. Some ISAs are known as ‘flexible ISAs.’ A flexible ISA enables you to make a withdrawal and put the money back into the account in the same year without impacting your ISA allowance.

When comparing ISA providers, the key is to think about what you’re looking for from the provider. This will help you find the right ISA for you. Are you looking for a sophisticated product designed for advanced investors? Or are you looking for a basic, low-cost ISA product?

Use our ISA account comparison to choose the best ISA account for you from the top ten ISAs available.

It’s also a good idea to check user reviews of a few different providers. Reviews will give you a better idea of the provider’s customer service levels and reliability. You can find platform reviews on Good Money Guide and on other review sites such as Trustpilot.

How to Open a Stocks and Shares ISA Account

Opening a Stocks and Shares ISA is typically a straightforward process. With most providers, you can open one online through the provider’s website or app.

To open a Stocks & Shares ISA, you will need to provide the ISA provider with:

• Your full name
• Your date of birth
• Your address for the last three years
• Your phone number and email address
• Your National Insurance number
• Your nationality (ISAs are only open to UK residents)
• Some proof of identification

You’ll also need to set up an online account. This will involve creating a login username and a password for your account.

Usually, the whole account opening process only takes a few minutes. Once your ISA is set up, you can add money to the account via your debit card. As soon as the money is in your account, you can begin investing.

How Much Should You Invest in a Stocks & Shares ISA?

You can invest up to £20,000 per tax year in a Stocks & Shares ISA. However, this is the limit across all your ISAs.

So, for example, if you have already invested £10,000 in a Cash ISA during the tax year, you’ll only be able to invest £10,000 in your Stocks & Shares ISA. The tax year runs from 6 April to 5 April. After the 5th April ISA deadline, you receive a new £20,000 allowance.

As for how much money you should invest in a Stocks & Shares ISA, this will depend on your personal financial situation.

If you have a substantial amount of savings to invest, you may want to consider making a large upfront contribution into your ISA to make use of your ISA allowance.

By contrast, if you have a lower level of savings but a high level of income, you may want to consider making larger regular contributions into your ISA.

You should not invest money that you are likely to need in the short term in a Stocks & Shares ISA. In the short term, ISA investments can fluctuate in value meaning that you may not get back what you invested if you withdraw your money soon after depositing it. Investments within a Stocks & Shares ISA should be viewed as long-term investments.

If you have more than £20,000 to invest, you can either invest it in another type of account such as a general investment account or a SIPP, or wait until the next tax year to invest it in your ISA.

Here is how to invest in a stocks and shares ISA.

DIY Investing vs Managed Investment Accounts

Some ISA providers cater to DIY investors and provide all the tools investors need to manage their own portfolios. Others, however, offer managed products designed for beginner investors and those who do not want to manage their own portfolios.

There are pros and cons to both types of accounts. The main advantage of using a DIY platform is that you’re likely to have more choice in terms of investment options. Typically, these kinds of platforms offer access to a wide range of shares, funds, ETFs, and bonds. On the downside, these platforms tend to be more complex and sometimes charge higher fees.

The main advantage of using a managed platform is that it’s generally easier to construct an investment portfolio. Often, you can set up a portfolio within minutes. On the downside, you’re likely to have less investment options to choose from.

The best option for you is likely to depend on a few issues including:

• Your investment experience. DIY platforms are more suited to those with considerable investment experience who are comfortable managing their own money. By contrast, managed platforms are generally more suited to beginner investors. With a managed platform, you don’t have to worry about choosing your own investments as the provider will do that for you.
• The time you have to devote to managing your investments. DIY platforms are more suited to those who have time to manage their money. Managed ISA products are well suited to those who don’t have the time to manage their own investments. With managed products, you can get set up in minutes and you don’t need to spend time researching investment opportunities.

Here’s how to research funds for DIY investing.

What Are the Best Managed Stocks and Shares ISAs?

There are a number of good managed Stocks & Shares ISAs available to investors today. These accounts are suited to beginners as well as those who do not want the hassle of managing their own investments. Some of the best managed Stocks and Shares ISA providers include:

Nutmeg

Nutmeg is a ‘robo advisor’ that has over 100,000 customers across the UK. When you sign up to Nutmeg, they ask you about your financial goals and risk appetite. With this information, they help you build a portfolio that’s right for you.

Nutmeg’s Stocks & Shares ISA offers four different investment options. These are: Fully Managed, Smart Alpha, Fixed Allocation, and Socially Responsible. All of these plans invest in ETFs to ensure that your money is thoroughly diversified.

One downside to Nutmeg is that there is a lack of investment options compared to other providers. With this platform, there is not a lot of flexibility and you can’t invest in individual stocks or funds.

Nutmeg’s ISA fees vary depending on the investment plan you choose and are based on your portfolio’s value. The annual account fee is 0.75% on the first £100,000 and 0.35% on the account value above £100,000. On top of this, investors face an average investment fund cost of 0.19% per year and average market spreads of 0.05%.

Wealthify

Wealthify is another robo advisor that offers a managed ISA product. With Wealthify, you choose an investment style based on your risk tolerance. The platform then builds your plan and manages it for you. You can start investing with just £1. Wealthify won the 2021 Good Money Guide award for best robo advisor.

Wealthify’s Stocks & Shares ISA offers five different investment options. The options are: Cautious, Tentative, Confident, Ambitious, and Adventurous. All of these strategies are constructed with a mix of low-cost passive investments such as ETFs and funds. Investors also have the option to build an ethical portfolio.

One downside to Wealthify is that, like Nutmeg, there are only a few investment options to choose from. There is not a lot of flexibility and you cannot invest in individual shares and funds.

Wealthify charges an annual fee of 0.60% for managing your investments. Other costs can apply, however, Wealthify aims to keep these as low as possible – around 0.16% for original plans and 0.71% for ethical plans.

Vanguard

Vanguard is an investment management company that offers a wide range of low-cost index funds and ETFs. Founded in 1975, it has around 30 million investors worldwide.

With Vanguard, you can build a managed ISA portfolio quite easily through its LifeStrategy product range. The LifeStrategy range consists of ready-made portfolios that combine a number of individual index funds into one fund portfolio, giving you access to thousands of shares and bonds in a single investment. There are five different portfolios with different levels of risk, ranging from cautious to aggressive.

A benefit of Vanguard’s ISA is that you can also invest directly in funds. In total, there are over 75 funds to choose from. On the downside, it’s not possible to buy individual shares in this ISA.

Vanguard charges a 0.15% account fee per year and 0.22% per year across its LifeStrategy funds.

What Are the Best DIY Investment ISAs?

DIY Investment ISAs are offered by a number of providers. However, some are better than others. Some of the best DIY Stocks & Shares ISA providers include:

• Hargreaves Lansdown
• Interactive Investor
• AJ Bell Youinvest

What can you invest in with a Stocks and Shares ISA?

A stocks and shares ISAs let you invest your money in a wide range of investments, including:

• Shares in companies listed on the UK stock market

• Corporate and government bonds – compare bond brokers

• Exchange-traded funds – compare ETF brokers

• Investment trusts

• Funds (OEICs or ‘open-ended investment companies’) – compare fund platforms

• Overseas shares and corporate bonds that are listed on a recognised stock exchange

You can also invest your money in ethical investments. Some ISA providers publish a list of ethical funds to make the task of identifying them easier.

There are also limits, for example you cannot use an investment ISA to trade on MT4.

How to Choose What Shares to Invest In

Historically, shares have delivered excellent long-term returns for investors. Over the long run, UK shares have returned around 5% per year in real terms (i.e. above inflation) according to the Barclays Equity Gilt study. That compares to around 1.3% for UK government bonds and around 0.7% for cash. US shares have performed even better. Since 1926, the main US stock market index, the S&P 500, has returned about 10% per year.

It’s important to understand, however, that not every stock has performed this well. To obtain these kinds of returns from the stock market, you need to own a whole portfolio of shares. It’s also important to understand that shares do not rise in a straight line. In the short term, share prices move up and down. To generate good returns from shares, you generally need to invest for the long term.

When choosing shares to invest in, there are a number of things to consider including:

• The company’s growth prospects. Companies that grow substantially over time tend to be good investments.
• The company’s level of profitability. Companies that are highly profitable tend to be good investments over the long run. Companies that are not profitable are generally higher-risk from an investment point of view.
• The company’s balance sheet. Companies that have weak balance sheets tend to be higher-risk investments.
• The company’s dividend track record. Companies that consistently increase their dividend payouts tend to be good long-term investments.
• The company’s valuation. Companies that have very high valuations tend to be higher-risk investments.

It’s important to think about your financial goals and risk tolerance when choosing stocks for your ISA. If your risk tolerance is low, it’s sensible to invest in lower-risk, dividend-paying shares. If your risk tolerance is high, you may want to allocate some capital to higher-growth shares. It’s important to remember that, in investing, risk is directly related to return. The higher the potential return on offer, the higher the risk.

You can sell and rebuy shares in an ISA, normally without affecting your annual ISA allowance. However, you do need to check with your ISA provider to ensure that this is definitely the case.

Here is how to buy shares.

What are the Best ISA Platforms for Beginners?

Some investment platforms are better suited to beginners than others. Generally speaking, beginner investors require platforms that are easy to use, cost-effective, offer access to products that are well suited to beginners such as ready-made portfolios, and are available to those with small amounts of money to invest. Some investment platforms that tick these boxes include:

• Nutmeg. Nutmeg is a robo advisor that helps its clients build investment portfolios that are tailored to their personal goals and risk tolerance. With Nutmeg, it’s very easy to build an ISA investment portfolio. One downside to Nutmeg, however, is that the platform only offers a few investment options.
• Wealthify. Wealthify is a robo advisor that offers a managed ISA product. With Wealthify, you choose an investment style based on your risk tolerance. One advantage of Wealthify is that its platform is very easy to use. Another advantage is that you can start investing with just £1. One downside, however, is that there are only a few investment options to choose from.

• Vanguard. Vanguard is an investment management company that offers a range of low-cost index funds and ETFs. With Vanguard, you can build a managed ISA portfolio easily through its LifeStrategy product range. One advantage of Vanguard is that it offers access to a wide range of funds and ETFs. One disadvantage, however, is that it’s not possible to buy individual shares.

What are the Best Ethical & Green Investment ISAs?

Ethical investing is an approach that seeks to generate financial gains while also considering environmental, social, and corporate governance (ESG) factors. It’s sometimes called ‘sustainable investing’, ‘socially responsible investing’, or ‘ESG investing.’

Two investment providers that offer ethical ISAs include:

• Nutmeg. With Nutmeg, you invest ethically by selecting its ‘Socially Responsible’ plan for your ISA. Its Socially Responsible portfolios are tilted towards companies and bond issuers that have high ESG standards.
• Wealthify. With Wealthify, you can invest ethically by selecting its ‘Ethical’ plan. Wealthify has joined forces with best-in-class ethical fund providers to create a range of five ethical plans that let you invest in organisations committed to having a positive impact on society and the environment.

It’s also possible to build your own ethical ISA through a DIY platform. Providers such as Hargreaves Lansdown, AJ Bell Youinvest, and Interactive Investor all offer a wide range of ethical funds and ETFs that can be purchased for an ISA.

What are the Best Investment ISAs That Offer Dividends?

Dividends are cash payments that some companies pay to their shareholders out of their profits. When you invest in dividend-paying securities within an ISA, all your dividend income is tax-free.

There are two main ways to collect dividends within an ISA. You can either invest in dividend-paying shares or invest in dividend-paying funds. Three top platforms that offer a wide range of dividend-paying shares and funds for ISA investors include:

• Hargreaves Lansdown. Hargreaves Lansdown is the largest investment platform in the UK. Through its investment platform, investors can gain access to a vast range of domestic and international dividend-paying stocks as well as a wide range of dividend-paying funds. You can find UK dividend-paying funds by filtering funds for ‘UK Equity Income’ funds.

• AJ Bell Youinvest. AJ Bell YouInvest is a low-cost online investing platform for the UK DIY investor. Through its platform, investors can access a vast range of domestic and international dividend stocks as well as a broad range of dividend-paying funds.

• Interactive Investor. Interactive Investor is a low-cost investment provider designed for those who are comfortable managing their own portfolios. Through its platform, investors can gain access to a wide range of dividend-paying stocks and funds.

Here you can compare the best investment accounts.

Here’s more about dividend investing and how it works.

What is the Best Lifetime ISA?

A Lifetime ISA is a tax-efficient investment account designed to help people save for retirement or purchase their first home. It is open to those aged 18-39. The annual allowance is £4,000.

The main advantage of the Lifetime ISA is that contributions into the account come with a 25% bonus while you’re under the age of 50. The disadvantage of this ISA is that there are penalties for withdrawing money before you turn 60 or buy your first property.

Two of the best Lifetime ISA providers include:

• Hargreaves Lansdown. The advantage of Hargreaves Lansdown’s Lifetime ISA is that it offers access to a vast range of investments. Investors have access to a wide range of domestic and international equities, over 3,000 funds, bonds, and more. One downside is that fees are higher than those of some other providers. Hargreaves Lansdown’s Lifetime ISA won the 2021 Good Money Guide award for best Lifetime ISA.
• Nutmeg. The main advantage of Nutmeg’s Lifetime ISA is that you can build an investment portfolio very easily. When you sign up to Nutmeg, they ask about your goals and risk appetite. They then use this information to build a portfolio for you. One downside to Nutmeg’s Lifetime ISA is that investment options are quite limited.

What are the Best ISAs for over 50s?

There are a number of good ISAs for those over 50.

Those looking for a managed ISA may want to consider the products offered by Nutmeg and Wealthify. Both of these providers offer a range of lower-risk investment plans that may be suitable for those over 50.

Those looking for a self-managed ISA may want to consider the ISAs offered by Hargreaves Lansdown and AJ Bell Youinvest. Both of these providers offer access to a range of stocks and funds that may be suitable for those over 50.

If your goal is to generate dividend income within your ISA, a self-managed ISA may be your best option. With this type of ISA, you can build a portfolio of income-generating investments. All income within the ISA will be tax-free.

What are the Best Junior Stocks and Shares ISAs?

A Junior ISA is a tax-efficient investment account that is available to those in the UK aged under 18. With this type of ISA, family and friends can save money on behalf of a child. Junior ISAs currently have an annual allowance of £9,000.

Three of the best Junior stocks and shares ISA providers include:

• Hargreaves Lansdown’s Junior ISA offers access to a vast range of assets including domestic and international shares, funds, ETFs, and more.
• Interactive Investor’s Junior ISA offers access to over 40,000 shares and 3,000 funds, as well as investment trusts, ETFs, and bonds.
• AJ Bell Youinvest’s Junior ISA offers access to a vast range of assets including domestic and international stocks, funds, ETFs and more.

Consider your children’s needs carefully before you open an account for them.

Compare the top children’s ISA accounts.

What is the Cheapest Investment ISA Platform?

Determining the cheapest investment ISA platform is not an easy process. That’s because fees tend to vary depending on the size of your account, the assets you invest in, and the number of trades you make.

Two of the cheapest managed ISA platforms are Nutmeg and Moneybox. Nutmeg charges a fee of 0.45% per year on assets up to £100,000 (0.25% above this) and average investment fund costs of 0.19% per year. Moneybox charges an annual fee of 0.45% along with annual fund provider costs of 0.12% to 0.30%. There is also a £1 monthly subscription fee but this is waived for the first three months.

Vanguard is generally one of the cheapest DIY ISA providers. It charges a 0.15% account fee per year along with low ongoing investment charges of around 0.20% per year. Vanguard’s platform only provides access to funds and ETFs, however.

For larger ISA accounts, Interactive Investor is generally one of the cheapest DIY platforms. It offers a flat-fee structure. Its lowest monthly fee is just £9.99.

What is the Best Investment ISA for Long-Term Investing?

Most Stocks & Shares ISAs are suited to long-term investing. The best ISAs for long-term investing, however, are those that offer the combination of a wide range of investment options and competitive fees. Over the long term, fees can have a large negative impact on investment returns so it’s important to find a provider that offers low fees.

One ISA provider that offers the combination of many investment options and low fees is Interactive Investor. Through its website, investors can access over 40,000 shares and 3,000 funds, as well as investment trusts, ETFs, and bonds. Interactive Investor offers a flat-fee structure (the basic plan is £9.99 per month) which can help those with larger investment portfolios save on fees. On the downside, Interactive Investor offers less investing tools and research than some other providers such as Hargreaves Lansdown do.

What is the Best Investment ISA for Instant & Easy Access?

A key advantage of Stocks & Shares ISAs is that they allow you to withdraw your money at any time. Generally speaking, it’s usually quite easy to access money that has been saved in an ISA although you may have to sell your investments first and this can take a few days.

Those looking to make regular withdrawals from their Stocks & Shares ISA may want to consider a ‘flexible ISA.’ This type of ISA enables you to withdraw money and then put it back into the ISA in the same tax year without impacting your ISA allowance. Most providers do not offer flexible Stocks & Shares ISAs. One provider that does is Charles Stanley Direct.

What are the Best Investment ISAs for Cashback and Offers?

ISA providers regularly offer sign-up bonuses and cashback deals in an effort to sign up new customers. Wealthify, for example, is currently offering £40 cashback to those who open an ISA and invest at least £400 within three months. Meanwhile, Scottish Friendly is currently offering a £45 welcome gift when you open a My Easy Choice ISA and start investing.

When choosing an ISA provider, sign-up bonuses and cashback deals should not be the key determinant of your decision. It’s more important to find a high-quality platform that offers low fees and charges and is suitable for your needs and requirements.

Where to Find ISA Platform Reviews

When comparing Stocks & Shares ISAs, it’s a good idea to check user reviews of a few different providers. Customer reviews will give you a better idea of the provider’s user-friendliness, customer service levels, and reliability. You can find ISA platform reviews on Good Money Guide. You can also find platform reviews on review sites such as Trustpilot.

What are the Best-Performing ISA Funds?

Fund performance is constantly changing. This means that the best-performing funds today may not be the best-performing funds next week or next month.

Identifying the best-performing funds is generally an easy process, however. For example, if you want to find the best-performing funds on Hargreaves Lansdown, simply navigate to the ‘Funds’ page and then filter funds by a ‘Sector’ so that you’re comparing the performance of similar funds. Then hit ‘Search.’ Once the list of funds is generated, you can sort them by discrete performance or cumulative performance. If you sort the funds by cumulative performance, you can find the best-performing funds over 3 months, 6 months, 1 year, 3 years, and 5 years.

It’s important to remember when picking shares to invest in that past performance is not an indicator of future performance. So, a fund that has performed well in the past may not necessarily perform well in the future.

Here’s how to buy shares so you can get the best value investment options for your money.

How to Transfer Old Stocks & Shares ISAs to Your New Account

Transferring old Stocks & Shares ISAs into a new account can be a smart move. When your accounts are consolidated, it’s easier to manage your money.

Generally speaking, transferring an old ISA to a new account is a straightforward process. Usually, it’s simply a matter of applying for a transfer with your new provider. They will contact the old provider and begin the transfer. Once the transfer is complete, you can invest the money in your new ISA. Usually, the process is completed within a few weeks.

Those wishing to transfer an ISA should be aware of the following:

• Transfers can be made as cash or stock.
• Transferring an ISA does not count towards your ISA allowance.
• You can transfer an ISA as many times as you like.
• Some providers charge exit fees (sometimes per stock transferred). It’s worth checking this before you execute a transfer.
• You cannot transfer your ISA to an ISA owned by someone else.

If you wish to execute a partial transfer, you should speak to your providers to see if this is possible. Not all ISA providers allow partial transfers.

You do not need to transfer a Junior ISA into an adult Stocks & Shares ISA. This should be done automatically by the provider.

How to Withdraw Money from a Stocks & Shares ISA

Withdrawing money from a Stocks & Shares ISA is typically a straightforward process. Usually, it’s just a matter of logging in to your account and selecting ‘withdrawal.’ It’s worth noting, however, that your investments will have to be sold before you can withdraw your money. This process can take several days.

With most Stocks & Shares ISAs, if you withdraw money and then put it back into the ISA in the same tax year, it will count towards your annual allowance. However, some ISAs allow you to take money out and pay it back into the account in the same tax year without affecting your annual ISA allowance. These are known as ‘flexible ISAs.’

Cash ISAs vs Stocks & Shares ISAs – Which ISA type is Best?

Cash ISAs are safer because you’re not exposed to investment risk. However, interest rates on cash ISAs are very low, so your money could be eroded by inflation and fall in value over time.

Other ISAs include innovative finance ISAs, which enable you to invest in peer-to-peer loans; junior ISAs, which are for people under age 18; and lifetime ISAs, which let you save for your first home and/or retirement.

The best ISA type for you will depend upon several things; your attitude to risk, how much you have to save and whether you prefer to earn consistent interest at a potentially lower rate.

You might prefer to save in a cash ISA for lower returns but also have the security of knowing that your deposit will not decrease in value.

Alternatively, if you’re willing to take on more risk, investing in stocks and shares with an investment ISA may mean you are exposed to more volatility in the short and medium-term but could earn larger returns in the long term.

Weigh up the advantages and disadvantages of Investment ISAs vs cash ISAs here.

Stocks & Shares ISA FAQs

How Do I Reduce Investment Risk Within a Stocks & Shares ISA?

Investing within a Stocks & Shares ISA involves risk. However, there are a number of ways you can reduce the investment risk within your ISA.

One way is to invest in lower-risk investments. These kinds of investments are available on both managed and DIY ISA platforms. Wealthify, for example, offers a ‘Cautious’ plan. Meanwhile, Hargreaves Lansdown offers access to many lower-risk funds.

Another way to reduce investment risk is to diversify your portfolio so that it contains a mix of different assets. This will help reduce overall portfolio risk.

It’s worth noting that if your ISA provider is regulated by the FCA, you will be covered by the Financial Services Compensation Scheme (FSCS) if the provider fails (up to £85,000). The FSCS does not cover regular investment losses, however.

Why Has the Value of My ISA Fallen?

ISA investments such as shares, funds, ETFs, and investment trusts are constantly fluctuating in value. So, it’s not unusual to see the value of your ISA fall in the short term. Stocks & Shares ISA investments should be viewed as long-term investments (5+ years). History shows that, over the long term, assets such as shares, funds, and ETFs tend to provide healthy, inflation-beating returns.

How Can I Improve the Performance of My Stocks & Shares ISA?

There are two main ways to improve the performance of your Stocks & Shares ISA.

The first way is to invest in better underlying investments. This is easier said than done, however. No one knows how an investment will perform in the future and past performance is not an indicator of future performance. That said, if you have a managed ISA and it has consistently underperformed other managed ISA products in the past, it may be worth transferring the ISA to another provider.

The second way is to reduce fees. Over time, fees can have a large negative impact on investment returns. It’s important to ensure that the fees you are paying are reasonable.

Can You Pay into More Than One Investment ISA in a Single Year?

You can own multiple Stocks & Shares ISAs, however, you can only pay into one Stocks & Shares ISA per tax year. The annual allowance is £20,000.

You are allowed to pay into a Stocks & Shares ISA and a Lifetime ISA in the same tax year as long as you don’t pay in more than £20,000 in total.

Should You Invest in an ISA or a SIPP?

Whether you should invest in an ISA or a SIPP will depend on your personal circumstances.

ISAs and SIPPs both have their advantages and disadvantages. The main advantage of investing in an ISA is the flexibility you have – you can access your money at any time. One disadvantage is that you can only invest £20,000 per tax year.

The main advantage of investing in a SIPP is that you receive tax relief on your contributions. This is essentially a bonus from the government for saving for retirement. One disadvantage of a SIPP, however, is that you cannot access your money until age 55 and then you can only withdraw 25% tax-free.

What Are Stocks & Shares ISA Rules?

The rules for investing in a Stocks & Shares ISA are as follows:

• You can open an account if you are a UK resident aged 18 and over.
• You can invest a maximum of £20,000 per tax year. This is the maximum you can invest across all your ISA accounts per tax year. So, for example, if you invest £5,000 in a Cash ISA during the year, you can only invest £15,000 in a Stocks & Shares ISA.
• You can have as many Stocks & Shares ISAs as you want but you can only contribute to one per tax year.
• You can withdraw your money from a Stocks & Shares ISA at any time.
• If you withdraw money from your ISA and pay it back into the account in the same tax year, it will count towards your ISA allowance. This rule does not apply to ‘flexible’ Stocks & Shares ISAs.

What Happens to Money in a Stocks & Shares ISA When You Die?

If you die, money and investments held within your Stocks & Shares ISA will be passed on to your beneficiaries.

After your death, your Stocks & Shares ISA will retain its tax benefits until one of the following things happens:

• The administration of your estate is completed
• The Stocks & Shares ISA is closed by your estate executor

If neither of these things happen within three years and one day of your death, your ISA provider will close your account.

In your will, you can leave your ISA to whoever you like. If you have a spouse or civil partner, they can inherit your ISA’s tax-free status as a one-off boost to their own ISA allowance.

How Many Stocks and Shares ISAs Can You Have?

You can own multiple stocks and shares ISAs, but you’re only allowed to pay into one of them each tax year.

There is an annual limit on how much money you can put into ISAs, which for the 2020/21 tax year is £20,000. This limit is split across all types of ISAs, so you could invest your whole £20,000 in a stocks and shares ISA or split it between a cash ISA and a stocks and shares ISA.

You can keep old ISA accounts from previous financial years open and continue to earn tax-free returns.

You can transfer ISAs from previous years into your new account, as long as your ISA provider allows ISA transfers.

This will consolidate your investments and keep everything in one place.