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Compare Stocks & Shares (Investment) ISA Accounts in the UK

Use our comparison tables to compare the best Investment ISA accounts in the UK.

Compare key features like research, added value, IPO and placing access, commission and costs or read our guide to investment ISAs

Investment ISA ProviderWhat can you invest in?How much does it cost?More Info

IG

 Over 12,000 global stocks, funds and ETFs yourself or get an expertly built portfolio that’s right for your risk profile with IG Smart Portfolios Invest in UK shares from £3, US shares for free, 0.5% on currency conversions. £24 per quarter, charged if you hold share dealing or ISA investments at the end of the quarter. Visit IG

IG Reviews
Your capital is at risk

Hargreaves Lansdown

 8 000 global stocks and shares, 2500+ funds available (UK and global stocks) Start ISA from £100, annual charge for holding investments in an HL Stocks and Shares ISA is never more than 0.45% (capped at £45 per year), to sell shares - £1.5 per deal, no charge to sell funds Visit HL

HL Reviews

interactive investor

 40,000 investment options (Shares, Unit trusts (funds), Investment trusts, Corporate and government bonds, Exchange-traded funds (ETFs) "A fair flat fee of £9.99 a month 1 free trade per month, (give back £7.99 credit every month to buy or sell any investment) £7.99 comission rate for all UK and US trades. Regular investing is free Fixed fee covers for multiple accounts (add a SIPP by 3 April 2020 and pay no SIPP fee until April 2021. Then just £10 a month extra)" II Reviews
Nutmeg Investments "Wide range of stocks and funds (UK stocks) 1800 ETFs " "Fixed allocation portfolios Nutmeg fee 0.45% up to £100k, 0.25% beyond, incl. VAT per annum Fully managed portfolios Nutmeg fee 0.75% up to £100k, 0.35% beyond, incl. VAT per annum Socially responsible portfolios Nutmeg fee 0.75% up to £100k, 0.35% beyond, incl. VAT per annum Average investment fund costs, paid to fund providers: Fixed allocation 0.17% Fully managed 0.19% Socially responsible investments 0.32% Average effect of market spread of 0.06% per annum " Nutmeg Reviews
AJ Bell "Stocks and shares (UK and 24 international markets) Over 2,000 funds (unit trusts and OEICs), investment trusts and ETFs" "Shares custody charge: 0.25% of the value of the shares, maximum £7.50 per quarter Funds custody charge: 0.25% on the first £250,000 of funds, 0.10% on the value between £250,000 and £1m, 0.05% on the value between £1m and £2m Buying and selling investments (per deal) £1.50 for Funds (including unit trusts and OEICs) online, £9.95 for Shares (including investment trusts, ETFs, gilts and bonds) online, £4.95 for Shares, where there were 10 or more online share deals in the previous month" AJ Bell Reviews
Bestinvest 2,500 funds, UK shares, investment trusts and ETFs No charge to open account or transfer investments, annual service fees are capped at 0.4% (or lower for bigger investments). It is free to buy and sell funds, and share dealing costs just £7.50 per trade. Bestinvest Reviews
Cavendish Over 3,500 funds, investment trusts and ETF's available Platform charge consists of the 0.20% FundsNetwork service fee and the 0.05% Cavendish Online ongoing fee. In addition you will pay a Fund Manager charge which will vary according to the fund/funds you wish to buy Cavandish Reviews

Charles Stanley

 "3000 funds 17 000 UK and certain overseas shares, investment trusts and ETFs" Transfer in existing ISAs or start contributing today from as little as £50 per month or a £500 lump sum. Low platform fee starts at 0.35%. For fund holdings (OEICs and Unit Trusts) the charge can fall as low as 0.05% per annum. For shareholdings the maximum charge is £240 per annum. Share trading online fee: £11.50 each time for buying/selling shares Charles Stanley Reviews
Fidelity "Over 3,000 funds Large selection of UK shares, growing all the time Bonds, investment trusts and exchange-traded funds (ETFs) Ready-made investment solutions from our experts" "Service fee - 0.35% or less (depending on the total value of investments). Service fee is capped at £45 Ongoing fund charges are set by the companies who manage the funds and start from 0.06% £1.50 for deals as part of a regular savings or withdrawal plan, or for a reinvestment of income or a dividend Simple charge of £10.00 for each deal placed online Phone trades are charged £30.00 for each deal UK Stamp Duty of 0.5% applies when you buy UK shares" Fidelity Reviews

Halifax

 Over 2,000 funds, shares, ETFs and more "Account admin charge - £12.50 per year Real-time online trades - £12.50 dealing commission per trade Scheduled regular investments - £2 dealing commission per trade" Halifax Reviews

iWeb

 "3000+ shares (UK, US, Europe) 2,000 funds 564 ETFs 294 investment trusts" "£5 dealing commission per trade on UK and international trades No annual administration charges - just a one-off account opening charge of £25 when you open your account Dividend reinvestment purchases are charged per reinvestment at a flat rate of 2% based on the value of the dividend (maximum £5) Voiding of ISA - £25 Repair of ISA - £25 Paper copy of account statement (on request) -£12.50 CHAPS / Same day payment - £25" iWeb Reviews

Selftrade (now EQi)

 "8000 stocks and shares (UK equities) Over 6000 funds from different geographical regions" "Custody fee - £17.49 per quarter for holding assets Dealing commission: Shares, Investment Trusts, Bonds, Gilts - £10.99 online and £27.50 for telephone Exchange Traded Products (including Exchange Traded Funds) - £9.99 online and £9.99 for telephone Mutual Fund (Unit Trust and OEICs) Sales - £10.99 online and £10.99 telephone Additional fee (from 0.3% to 0.95%) for international share trade value Stamp duty reserve tax - purchase of UK equities (0.5%), Purchase of Eurobonds (0.5%) Regular investment - £1.50 Dividend reinvestment - £1.50" eQi Reviews

The Share Centre

 "1400 UK shares (FTSE 100, FTSE 250, AIM etc) 4300 funds, 120 platinum funds " £5.00 per month and a dealing option to suit Standard dealing option: Fixed account admin fee - £5 per month Dealing commission - £7.50 per deal for trades less than £750, 1% for £750 and above Dealing commission for phone/post/email £20 per deal for trades less than £2,000, 1% for £2,000 and above Stamp Duty Levy 0.5% on the purchase of UK shares (excluding AIM and other recognised growth markets). Other rates may apply to non-UK shares. PTM Levy £1 on transactions over £10,000 Regular investing - 0.5% (min. £1) Dividend reinvestment - 0.5% Statements & contract notes by post rather than email - £2.40 per month Transfer to another provider - £25 per account Deceased customer account administration - £100 Overdue fee charge - Sell stock (per investment) -£7.50 Share Centre Reviews

Barclays

 "30 000 shares from 36 exchanges, around the globe 62 funds 50 US ETFs" "Customer fees (capped at £125 per month): £4 per month min Or the sum of the following: Funds – 0.2% p.a. Other investments 0.1% p.a Online transaction fees: Funds - £3 per online transaction Other investments - £6 per online transaction All regular investments are £1 per transaction. Telephone transactions are £25 each" Barclays Reviews

Wealth Simple

 "UK and international (Asia, North America) stocks Each of portfolios includes between 10 and up to 15 funds and each one represents a specific market" "Basic (deposit 0 - £100k) 0.7% fee Additional charges averaging 0.2% Black (deposit £100k+) 0.5% fee Additional charges averaging 0.2%" Wealth Simple Reviews

Moneyfarm

 "Portfolios: UK and international stocks ETFs Government bonds Cash Credit Commodities & real estates " "On the first £10,000 - 0.75% per year On anything between £10,000 - £50,000 - 0.60% per year On anything between £50,000 - £100,000 - 0.50% per year On anything over £100,000 - 0.35% per year + average investment fund fees per year 0.20% + effect of market spread? per year up to 0.09%" MoneyFarm Reviews

Vanguard

 75 individual funds – including ETFs, active funds and index funds "Account fee - 0.15% per year Fund charges - these are set by Vanguard and apply at the level of the particular fund(s) in which you invest and are also referred to as fund management costs. Transaction fees - fixed fee £7.50 Accelerated payments via CHAPS - £25 fee per payment Interest charge - 0.2%" Vanguard Reviews

Wealthify

 Mix of investment plans (cautious, tentative plan, confident plan, ambitious plan, adventurous plan), UK and overseas "Wealthify fee - 0.60% Average investment costs - 0.22%" Wealthify Reviews

Legal and General

 "60 UK and global funds UK stocks and shares " "No fees available publicly Withdrawal penalty can apply - 25%" Legal & General Reviews
"110 funds from low to high risk UK stocks & shares " "Entry charge - 4% Portfolio transaction costs - 0.09%" Scottish Friendly Reviews

The Pros & Cons of Stocks & Shares ISA Video Discussion

In this episode of Good Money Guide TV we talk to Rebecca O’Keeffe from Interactive Investor and discuss the Pros and Cons of investing in Stocks and Shares ISAs. We cover, who they are good for, what Interactive Investors offers through their SIPP account and look at the risks and rewards of investing in Stocks and Shares ISAs.

Good afternoon. Welcome to this episode of Good Money Guide TV. Today, we’re with Rebecca O’Keeffe from Interactive Investor. We’re going to talk about stocks and shares ISAs, what are they, what are the benefits, what are the risks, what can you have in them, and who they’re for. So Rebecca, nice to see you. Thank you very much for joining us. Lovely to be here. Do you want to initially talk us through exactly what an investment ISA is or a stocks and shares ISA is, and how it differs from a normal ISA? Okay. So an investment ISA, or more commonly known as a stocks and shares ISA, is an individual savings account within which you can invest. That possibly doesn’t actually necessarily give you a great definition, but an ISA itself is just a tax wrapper. So within which you can choose how you want to invest, and again, most stocks and shares ISAs now allow you to invest across a broad spectrum of different investments, including funds, investment trusts, ETFs, individual stocks and shares, and even international stocks and shares as well. So you are the one that does the actual selection. You choose. But it is slightly different to a pension in that unlike a pension, where you get tax relief on the way in, there are no upfront tax advantages of investing in an ISA, however, it is almost free from further tax, so I’ll come back to the almost bit. Well let’s move on to the tax issue because that’s one of the major benefits, isn’t it? So what would you say are the major benefits of a stocks and shares ISA? The major benefit of a stocks and shares ISA is that it’s almost entirely free from further tax. The only exception to the free from further tax is that there may be withholding tax on foreign stocks that you own within your ISA, but other than that, any dividends you receive, any interest on cash, any capital gains you make, you don’t have to pay any tax at all. Another benefit is that it’s not declarable, so that means that you can effectively create an income stream for yourself. A lot of people look at ISAs and think to themselves, oh, I’ve got a capital gains allowance, I’ve got a dividend allowance; why would I want to invest in an ISA? And it is relatively true that over a single year, the benefit of an ISA is fairly limited. But it’s the idea that if you’re investing in an ISA every year and you can create an income to go alongside a potential pension income, which is taxable, then that way, you can become hugely tax efficient and choose how to manage your income in retirement to pay the minimum amount of tax that you can. And of course, one of the other advantages is that it’s accessible, unlike a pension. Very good point. Unlike a pension where you have to wait until at least the age of 55 and that is increasing. With an ISA, you have full accessibility all the time. So that does mean that you might be tempted to take money out, but of course, once you’ve taken money out of the ISA, it loses its tax efficient status, but for the majority of people who are happy to invest in an ISA year in, year out, with potentially a life goal or a target in mind, or as a way to supplement the years between when they actually retire or when their state pension kicks in, or even just to actually supplement their retirement income, it is a really good thing to be able to access your money. The other thing that’s important to note is that an ISA is unlimited in terms of its investment potential. With a SIP or a pension plan, you have an overall lifetime limit, and that can potentially subdue people’s enthusiasm for investing in a pension. Whereas an ISA, you can invest as well as you like, hopefully, and there is no limit to how much you can have in an ISA – well, at least for the moment anyway. And the disadvantages, of course. Let’s talk about them. Are there any limitations to what you can have in there in terms of assets or how much can you put into it? So there used to be sort of specific investment limits but actually, now, it is pretty much a case that you can invest whatever you like within an ISA. The only exception being that you can’t actually hold foreign cash. So in the main, you can pretty much hold whatever you want to hold in an ISA, so whether that’s stocks and shares, UK, international, anything else. Of course, that comes with performance risk if things don’t necessarily go your way. And sort of important factors to bear in mind are that you should try and be as diversified as possible, and the longer you have to invest, the less risk you take when it comes to investing in stocks and shares. And in fact, that’s one of the key differences between a normal savings ISA and an investment ISA. With the savings ISA, your money’s there in cash, quite often not earning a huge amount of interest, but with an investment ISA, obviously investments can go up. You’ve got a huge amount of capital appreciation potential. But because you’re managing your own investments, if you don’t do it sensibly, you can lose all your money, can’t you? Hopefully not all but yes. That’s absolutely correct. So yes, it is absolutely important to note that you are the one that’s responsible for investing in your own ISA. You do, in terms of limits, have £20,000 annual limit, as an adult, and if you have kids or even grandkids, you can invest in a junior ISA. With a junior ISA, the parents or guardians are the ones that have to set it up, but after that, other people can contribute to it, and again, that can be a really good way of giving kids an interest in the markets. It’s interesting, children and wealth management and investing. There’s been a big push this year for should we be so commercial about Christmas or should we be investing in our children’s future. And we talk to quite a lot of people about whether or not people should have ISAs, which of course are accessible when they’re 18. So you know, you put 20 grand in a child’s ISA and then give to them at 18. Is that a sensible thing to do or should we be teaching children about wealth management and investing in school so they can responsibly manage their own money? These are all really key questions, and of course, one of the big concerns when you invest in a junior ISA is that you’re worried that your kids or grandkids are going to buy themselves a motorbike when they’re 18 and that’s definitely not something. But interestingly enough, and I have kids who are no longer junior ISA holders, who have migrated to the full-blown ISA side of things… Because of course, when it migrates, it’s their money, isn’t it? It is their money. You manage it, you control it until they’re 18. Absolutely. And then they become adults and responsible. But actually, since they were about 14, they were making investment decisions. And whether that was should I purchase Dominos or Pokémon is all the rage, or even Fortnite and buying Tencent, it’s actually quite an interesting thing to engage with your kids about what they’re doing. And certainly, when it comes to teenagers, they can often be very knowledgeable about what’s in and what’s out, especially when it comes to social media and platforms and everything else. So sometimes, you overlook teenage trends at your peril when it comes to investing. So for anyone who’s not got an ISA, an investment ISA at the moment, who just has a general stock-brokeraging account, they’ve got some investments, what should they do? Is there a way for them to switch that into an ISA to become more tax efficient? Yes. So one important point to note with an ISA is that if it’s not already tax wrapped in an ISA, so if you already have an existing ISA and you want to transfer it to somebody else then that’s fine. It retails its tax status. But if you hold investments outside an ISA, you’re not allowed to just simply put those investments in. So any new money that’s made into an ISA or an ISA subscription has to be made in cash. But that doesn’t mean to say that you need to find new money per se every year, because if you’re sitting on unwrapped or non-tax-efficient investments, they can often be a very good way to look at how to manage funding your ISA contribution. So there is something called a bed and ISA, which is where you sell the holdings outside of the ISA and you buy them back in the ISA straight away. That minimises the exposure to the markets, because obviously, you are doing the two trades pretty much simultaneously. You will never buy back quite the same amount, because obviously, if you’re buying back shares, you’ve got stamp duty to consider and there will potentially be a bid offer spread. But it can be a way of effectively making non-tax-efficient investments tax efficient, because that’s what you want to do. The vast majority of people don’t have £20,000 lying around to put into their ISA every year. So looking at investments that aren’t tax efficient and using those as a potential source of how to get more money into your ISA is a good starting point. Okay, that’s interesting. So let’s just talk about the process involved in that. It sort of sounds relatively arduous but is it in fact? Can people just phone up? If say they’ve got some stocks in an account… Yeah, absolutely. In fact, you don’t even need to necessarily phone up. You can click on a bed and ISA page. You can choose to log into your account and select the stock that you want to sell in your trading account and repurchase in your ISA. And it’s all done pretty much instantaneously. So that’s good. So there’s no price risk, there’s no danger that a stock could move whilst this is being done? No. So it is done simultaneously, so you eliminate the price risk side of things. The only caveat I would say is that there are occasions where if you’re holding a very small cap stock, where the spread might be significantly wider than normal, so when you’re talking about a bid offer spread on a FTSE 100 stock, it tends to be tiny, so you’re actually excluding the stamp duty aspect of it, you tend to be buying back approximately the same number of shares as you’re selling, but with a stock that is smaller and has a much wider bid offer spread, quite often, that might be a situation where you would actually ring your broker because they might be able to deal it in the market with a market maker better than you could do it online. We’ve touched on the advantages; what about the disadvantages of bed and ISA? Again, the disadvantage is really the idea that you’re going to buy back slightly fewer because you’ve got to pay commission on the purchase, though typically, bed and ISAs mean that you don’t pay commission on the sale, and that you’ve got stamp duty. And as I say, the biggest single risk is that the bid offer spread is higher than you might like. So in those instances, it’s very useful to think to yourself should I be contacting my broker rather than try and do this online, or is there a different more liquid stock that I might be better off selling and repurchasing in my ISA. Well I think that’s one of the important things to point out about some brokers as well is that having someone you can talk to on the phone is very important. Absolutely. I mean in a lot of ways, the online world is now such that if you have to ring your broker, you almost have done something wrong. As the provider, you’re sort of thinking to yourself. So I love all these stats about we answer the phone in 15 seconds, because I’m thinking to myself, that’s great but I actually don’t want to ring you. Fundamentally, having an online account and being sort of able to trade yourself should mean that you don’t have to call us. I should caveat that by saying we are there on the other end of the phone and we’re very friendly and very nice, and if you need to call us, absolutely do. I was a broker for many, many years and we’d never hear from some clients and then the only time they’d ever phone us up was when there was a problem, but at least problems can be dealt with when you can speak to someone. I think all the online execution only brokers that don’t offer phone support, it must be very frustrating. I mean there’s no way that you would want to really have an account unless you could actually talk to somebody and get the reassurance. And for some of our customers, that’s a vital part of the service. But for most people, the online space is their world and it should be that they have the reassurance of knowing that there is somebody there to talk to if they need to, but they’ll probably be keeping their fingers crossed that they won’t need to contact you. With you in particular, does it cost any more to talk to people over the phone? Do phone transactions cost more than online transactions? Yes, phone transactions do cost more. The only instance where they don’t cost more is if you can’t trade a particular thing online, in which case calling us, we’ll execute at the same price as the online trade. And on fees, what should people be mindful of in terms of fees when they’re looking at stocks and shares ISAs? So again, the big single thing to look at is a) the value of the underlying costs of the investments that you’re holding, so that’s do you want to be investing in passive funds or active funds, and are the active funds worth the premium over the long term. And they of course are attached, that they have management fees attached to them, don’t they? But stocks and shares don’t. No. Stocks and shares don’t. So if you are holding a basket of stocks and shares in your account then the big thing to note is a) how much commission you might pay to buy those stocks and shares, and the second really important point is whether your provider is a percentage fee provider or a flat fee provider. And in terms of percentage fees and flat fees, if you’re just starting out and you’ve got a small number of assets, the chances are a percentage-based provider is the way to go. And if you’ve got a large number of assets or large holdings or you’re a frequent trader potentially, then flat fees can very often be highly economic. I mean certainly from our point of view, we’ve had independent research done that suggests that you can save tens of thousands of pounds if you have sizeable assets rather than pay a percentage-based fee. So one final point, you’ve got the Interactive Investor Super 60, the II Super 60. Do you want to briefly tell us what that is and how it can help your customers? So the II Super 60 is a rated fund list, compiled by a panel of experts within II. Two big points to note are that there aren’t any conflicts of interest or commercial considerations that come into play, and the second is that it contains funds, ETFs and investment trusts, so that we cover the entire spectrum of available assets, rather than just concentrate on the funds industry, which tends to be where rated funds go. Obviously, from the point of view of different customers having different requirements in terms of where they want to invest and how they want to invest, we provide lots of fact sheets and information and tools and filters so that investors can choose to try and find the right investment to suit their own risk profile or what they want to do or how long they’ve got to invest. So there is a lot of information out there for investors from a variety of different resources. In theory, it has never been easier to invest. That might sound quite trite but the reality is that there is a huge amount of information online, huge amount of resources. So even though it might appear to be scary and certainly from the point of view of people who’ve been investing perhaps in cash ISAs all their life, the idea of investing in stocks and shares might be an anathema. They might think to themselves I really don’t want to do this. It’s still actually… over the long term, investing in shares is proven to deliver better returns than any other asset class. So certainly, it’s something that people should consider, rather than sitting cash, which is losing money in real terms. Where do you think people can go to get guidance and advice and information on where to invest? Any websites you can recommend? Obviously, Interactive Investor. You’ve got a great forum. I’ve probably been looking at your forum for 20 years. It’s always great fun; there’s a lot of characters on there. But aside from Interactive Investor, where should people go? Well certainly, you’ve got the Weekend Press, which tend to do good money supplements, and that’s always a good starting point because they cover off the big, broad stories that are happening. You’ve got other websites that are the data providers. For example, Trustnet or Morning Star, and they can be very useful as a way of looking at funds and fact sheets and getting all of the information that you need. There are lots of brokers and other places that will provide you with the information you want. I promise you, if you have heard about a particular fund or stock and you put it into Google, you’ll probably have a couple of million ways in which you can actually look at it. But certainly from the point of view of those online blogs, podcasts, videos, all of which are now designed to really provide a credible source of information for you if you’re trying to make an investment decision. Okay, excellent. Well Rebecca, thank you very much for your time. Thank you very much for watching this episode of Good Money Guide TV. We’ll be back talking about another asset class shortly. Thank you.

 

Our Guide to Investment ISA accounts

An ISA, or Individual Savings Account, is a great vehicle to invest through because it allows your money to grow free from tax.

Choosing an ISA, however, isn’t always straightforward – particularly when it comes to comparing fees. In this guide, we explain how investment ISAs work, whether they’re right for you, and what to look out for when weighing up the different products on offer.

What is an investment ISA?

An investment ISA is a tax-efficient wrapper that shields your investments from capital gains tax (CGT) and income tax.

Investment ISAs are commonly called stocks and shares ISAs, but in addition to shares you can invest in investment trusts, open-ended investment companies (OEICs), unit trusts, government bonds and corporate bonds.

Each person in the UK has an annual ISA allowance – this is the maximum amount you can invest across all your ISAs (including cash, investment, Lifetime and Innovative Finance ISAs) in any given tax year. The allowance is currently set at £20,000.

You can open an investment ISA through an online investment platform, fund supermarket, bank or stockbroker, directly from a fund manager, or via a financial adviser.

The ability to shelter your money from tax is probably the biggest draw of investment ISAs. If you open one through a self-select, or “DIY”, investment platform it also gives you control and choice over your investments.

It’s important to remember, however, that ISAs attract just as much risk as if you invested elsewhere. If your investments perform badly, you could end up with less money than you originally put in. In some instances it can be difficult to access your money quickly, so it’s best to view ISA investments as long-term investments.

Understanding Investment ISA Fees

One of the most confusing aspects of investment ISAs is the plethora of fees and charges levied by providers.

If you’re investing through an online platform or fund supermarket, the first fee to look out for is the “platform” or “custody” fee. This will either be a flat fee, which tends to be more cost-effective for very large sums of money, or a percentage of the value of your shares/funds.

Other fees to compare are the fees for buying and selling investments – these can range from £0 to over £15. If you hold funds, you’ll also pay an annual management charge to the fund manager, and if you’ve opened your account via a financial adviser there will be advice fees to pay.

Comparing the various fees will help you to determine whether your current ISA provider is overcharging you. Providers sometimes change their charging structures so it’s important to make sure it is still as cost-effective as when you first opened your account.

It is possible to transfer your ISA from one provider to another, but you might have to pay exit fees in order to do so. If you’re happy with your investments you can request an “in specie” transfer, which is when all your investments are moved to your new provider. A cash transfer – when your investments are sold and the proceeds passed to the new provider – tends to be quicker but your money will be out of the market, meaning you could miss out on any share price gains.

Should you invest in a stocks and shares ISA?

A stocks and shares ISA can be opened by anyone who is aged 18 or over and a UK resident. You can invest up to £20,000 each tax year across all the ISAs you hold. You could invest your entire allowance in a stocks and shares ISA or split it between other ISAs such as cash ISAs.

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

Investment ISAs and tax

Investments held within a stocks and shares ISA do not attract capital gains tax (CGT) or income tax. This means investments that pay interest, such as government and corporate bonds, provide tax-free income. If you make a profit when selling your investments, you won’t pay CGT.

Any dividends you receive on shares held within an ISA are also tax-free. These dividends won’t eat into the annual £2,000 tax-free dividend allowance everyone has for non-ISA investments.

If you complete a tax return, you do not need to declare any ISA interest, income or capital gains on it.

Who Are The Best Investment ISA Providers?

You can invest your ISA in a wide range of underlying investments – shares in companies, unit trusts and investment funds, corporate bonds and government bonds.

Once you’ve chosen your provider and opened your account, you can start investing your money straightaway.

It’s important to choose the right type of investment ISA. If you want to manage the ISA yourself, look for a self select or DIY investment ISA. If you want an expert to make decisions for you, a managed ISA would be more appropriate.

Make sure your chosen provider offers all of the products you want to invest in. Some provide access to shares or funds only, while others offer the entire gamut of investment options.

It’s also important to choose a provider that suits your investment style. If you trade frequently, look for an ISA with low dealing fees. If you’re just starting out, choose a provider that offers lots of help and guidance.

An investment ISA will generally be right for you if:

  • You have enough cash in case things go wrong – a good rule is to set aside six months of living expenses;
  • You intend to invest for at least five years; and
  • You’re comfortable with the risks of investing.

The different types of investment ISAs

The two main types of investment ISA are “self select” and “managed”.

A self select investment ISA puts you in complete control of choosing your investments, monitoring their performance and managing your portfolio.

With a managed investment ISA, a team of experts will make all of the decisions about where your money is invested. Some providers have a range of “ready made” investment portfolios which they run on investors’ behalf. Filling in the platform’s online questionnaire will help you to decide which portfolio is most suited to your circumstances.

Our top three choices for self-select investment ISAs are:

  • Hargreaves Lansdown: the fees are higher than some of its competitors but the provider offers excellent customer service, an easy-to-use website and a wide range of informative guides to help you make your investment choices.
  • AJ Bell Youinvest: a cheaper option, AJ Bell lets you choose between having complete “DIY” investment ISA, one of its six risk-rated passive funds, or one of its four ready made portfolios.
  • iWeb: if you have a large portfolio and/or trade infrequently, iWeb works out as one of the cheapest providers because it doesn’t charge a platform fee.

If you’re looking for a managed investment ISA, our top picks are:

  • Evestor: this has one of the lowest platform fees and its investment charges are a maximum of just 0.13%. After completing a questionnaire, you’ll get advice on what to invest in or you can choose from one of three risk levels and have your money allocated to a portfolio.
  • Nutmeg: with Nutmeg you choose a goal, timeframe and amount you’d like to invest and then select your desired risk level. The platform shows what kind of investments it will use to build your portfolio, which is then rebalanced over time. There is a more expensive “fully managed” option, where your investments are proactively managed by experts.
  • Wealthify: backed by Aviva, Wealthify builds an investment plan based on your chosen level of risk and manages it on your behalf. It is really simple to use, making it a good option for beginner investors.

Managing your stocks and shares ISA

You can invest in a stocks and shares ISA for as long as you want to. When you die, it will form part of your taxable estate and it could be subject to inheritance tax (IHT), unless it is passed onto your spouse.

It is best to view your stocks and shares ISA as a long-term investment. Investments like shares and bonds move up and down in price, and the less time you invest for the more pronounced this volatility will be. Most experts recommend investing for at least five or even 10 years.

If you plan to put money into an ISA for a short period of time, you’re probably better off choosing a cash ISA. A cash ISA lets you earn tax-free interest on cash-only savings.

You can transfer from a cash ISA to a stocks and shares ISA by filling out your new provider’s transfer form. If you transfer an ISA that you’ve paid into during the current tax year, you must transfer the whole balance. ISAs from previous years can be transferred in part or whole.

It’s also possible to transfer from a stocks and shares ISA to a cash ISA by contacting the cash ISA provider you’d like to move to. The investments you hold will be sold and transferred as cash.

It isn’t possible to carry forward your unused ISA allowance from one tax year to the next – so if you don’t use it, you lose it. You can invest your allowance as one lump sum or drip feed it regularly each month.

Drip feeding enables you to ride out the ups and downs of the stock market – you buy fewer shares when prices are high and more when prices are low. You could miss out on the full benefit of price rises in the early years, but you avoid the risk of exposing your entire sum to a market crash.

Stocks and Shares ISA performance FAQs

- Who is responsible for my investment ISA making money?

Unless you invest through a managed ISA, where experts choose and monitor your portfolio, you have sole responsibility for your ISA making money.

- Is my money protected in an investment ISA by the FSCS?

Investments held in a stocks and shares ISA are covered up to £50,000 if the platform or broker enters default. You aren’t covered for any losses you make as a result of your investments performing poorly.

- How many investment ISAs can I have?

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

- How can I track the performance of my investment ISA?

By logging into your ISA account you can view the performance of each underlying investment and the overall performance of your portfolio. Some providers offer charts showing how your portfolio has performed over time.

- Are you guaranteed to make money with an investment ISA?

No – as with any investment, you could end up with less money than you originally invested.

- What if an Investment ISA looks too good to be true? 

Be careful, if you are worried read our guide on how to spot investment ISA scams

Quick summaries: Stocks and Shares ISAs explained


- Stocks and sharesISAs tax breaks

Money held in a stocks and shares ISA can grow free from income tax. If you sell investments and make a profit, you do not have to pay capital gains tax.

- Stocks and Shares ISAs Annual allowance

You can invest up to £20,000 across all your ISAs each tax year.

- Stocks and Shares ISAs Range of assets

You can invest your stocks and shares ISA money into shares, investment trusts, open-ended investment companies (OEICs), unit trusts, government bonds and corporate bonds.

- Stocks and Shares ISAs Self-select ISAs

Self-select ISAs give you complete control over choosing your investments, monitoring their performance and rebalancing your portfolio.

- Stocks and Shares ISAs Dividend tax

Any dividends you receive on shares held within an ISA are tax-free.

- Stocks and Shares ISAs ISA charges

Charges vary considerably from one provider to the next, but will usually include a platform fee, trading fees and fund manager fees. Some providers also charge exit fees.

- Stocks and Shares ISAs Compensation scheme

Investments held in a stocks and shares ISA are covered up to £50,000 if the platform or broker enters default. You aren’t covered for any losses you make as a result of your investments performing poorly.

What is a stocks and shares ISA?

A stocks and shares ISA is an account that allows individuals to invest in stocks, shares, bonds or commercial property without paying any tax on their investments. Every British citizen over the age of 18 can invest up to £20,000 each year in a combination of cash ISAs, innovative finance ISAs and stocks and shares ISAs. Stocks and shares ISAs are higher risk than cash ISAs, but can also produce a higher return.

How do stocks and shares ISAs work?

When you set up a stocks and shares ISA, any investments that you place within it will be exempt from the usual taxes on income or gains. This means that when you sell assets that are held within an equity ISA, there will be no Capital Gains Tax or Income Tax to pay on dividends or corporate bond interest, regardless of whether you've used up the relevant personal allowance.

Whether a stocks and shares ISA will be of benefit to you will depend on whether your investments exceed the personal allowances in any of these areas. For larger investors, the tax advantage of a stocks and shares ISA will be significant. For very small investors, their ISA allowance might be better used for a cash ISA.

You can read more on how to compare stocks and shares ISA accounts here

How to set up a stocks and shares ISA

A stockbroker is required to set up and run a stocks and shares ISA. There are a variety of providers who can offer this service but the cheapest are online platforms. You will be charged for using the platform, for buying and selling assets and for the services of fund managers who are managing any funds in which you have invested. There could also be a charge for transferring from one platform provider to another.

Choosing a stocks and shares provider

- What to avoid

Don't choose a platform without understanding all of the charges. This will allow you to compare ISA accounts and pick the one that will best suit your investing style. The transaction fees will be very important for active investors, but much less so for people who take a more passive approach.

- What to look for

Pay attention to the transfer out fee. In general, it is recommended to invest in funds for at least five years in order to smooth out any temporary falls in value. Over this time period, the fees charged by a provider could easily become uncompetitive compared to other platforms.

An example of investing using stocks and shares ISAs

There are many different approaches to investment, but a popular method of reducing risk is to drip feed money into an ISA over the course of a year. This ensures that the investor is protected against drops in the value of the equities. For example, if £5,000 is invested in a fund in March and it drops in value by 20%, then the investor will be left with £4,000. A drip feeder would buy £2,500 in March, which would be worth £2,000 in April, and could then buy a further £2,500 at the lower price. This would leave the investor with £4,500 and a larger stake in the fund than the non-drip feeding example.

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