Stocks and shares ISAs

A stocks and shares ISA is a type of investment account where you can put money into a range of investments.

It could be for you if:

• you want to invest money with the aim of growing your investment over time
• you aren’t looking for immediate access to your money
• you’re prepared to keep your money invested for a number of years
• you haven’t used up your total ISA allowance for the current tax year
  
• you’re comfortable that the value of your investments can go up and down and you might get back less than you put in.

If you don’t understand a financial product, get independent financial advice from a regulated financial adviser before you buy.

A stocks and shares ISA is effectively a ‘tax wrapper’ that can be put around a wide range of different investment products. Any investment growth or interest earned within a stocks and shares ISA is free from Income or Capital Gains Tax.

Lots of different types of investment can be held in an ISA, including:

• unit trusts
• investment trusts
• exchange-traded funds
• individual stocks and shares
• corporate and government bonds
• OEICs (Open Ended Investment Companies).
• fractional stocks and shares.

You’ll often find that Stocks and Shares ISAs are sold and marketed as products in their own right.

You can pay a total of £20,000 into a Stocks and Shares ISA each tax year. 

• You can divide your ISA allowance across the four different types of ISAs: cash, stocks and shares, innovative finance (IFISA) or lifetime (LISA). The maximum you can put into a lifetime ISA is £4,000 each tax year and you need to be 18 to 39 to open one.
• Your annual ISA allowance expires at the end of the tax year (5 April) and any unused allowance will be lost. It can’t be rolled over to the following year.
• You can make a lump sum investment and/or regular or ad hoc contributions throughout the tax year.
• Any increase in value of the investments in your stocks and shares ISA is free of Capital Gains Tax.
• Income from your stocks and shares ISA is free of UK Income Tax.
• It’s worth shopping around to make sure you find an ISA that suits you. Compare any charges for the ISA wrapper and the range of investments you can put inside.

You can save up to £20,000 in ISAs until the end of the 2026/27 tax year. This can be in cash, stocks and shares, or a mixture of the two. 

Flexible ISAs allow you to withdraw and replace funds during the tax year.  

For example, if you invest £20,000 at the start of the tax year and later take out £5,000, you’d be able to put that £5,000 back in before the end of the year without breaking the limits. 

If an ISA is not flexible, you cannot make any further contributions once you’ve used your allowance for the year – so withdrawals cannot always be replaced. Not all providers offer flexibility, so if this is something you need, check carefully with the provider before opening the ISA. 

If you’re thinking about investing, see our Thinking about investing guide.

If your husband, wife or civil partner dies, you can inherit their ISA allowance. You will receive an additional ISA allowance equal to the value of the deceased’s ISA savings at the time of death.

If you want to switch your ISA to a different provider and keep all the money tax-free, you’ll need to transfer it. You can’t just close it, withdraw the money and reinvest it elsewhere.

From 6 April 2027, if you’re under 65 it will not be possible to transfer from stocks and shares or IFISA to cash ISAs.

Here’s how it works: 

• All ISA providers have to allow transfers out, but they don’t have to allow transfers in.
• You can transfer money from a cash ISA to a stocks and shares ISA, and vice versa.
• You can choose how much you transfer – you don’t have to transfer it all.
• Fractional shares can’t be transferred this way. The only way to change providers is to sell and use the money to invest on another platform. Any gains will be free from capital gains tax – CGT – as it will be coming from an ISA.  

• It’s possible to invest in specific companies by buying whole shares.  
• With some single shares from companies costing £100s or even £1000s, customers who want to invest in these companies but spend smaller amounts have the option to buy a portion of a single share. This is called a ‘fractional share’.
• You can’t buy fractional shares on the open market. Instead, you need to invest via an investment platform. Not all providers will offer this – so if it’s something you’re interested in, it’s worth checking first. 
• Rules from HMRC that came into force on 4 November 2024 mean that any fractional shares you have already bought or buy in the future under the ISA wrapper will be tax free.

• You can sell the assets held in your ISA at any time and there’s no minimum length of time you need to hold it.

• It’s important to check the charges as these can vary a lot and can impact the amount of money you get back.
• By making sure of the details you can also avoid being overcharged.

Depending on the type of firm that provides your stocks and shares ISA, there are different limits to how much of your savings are protected. So, it’s important to check what compensation is available when comparing different providers, particularly if you have more than £85,000 in your ISA. 

If your ISA provider is an ‘authorised deposit taker’ – such as a bank or building society – then the first £120,000 per person, per firm is protected.

Where your stocks and shares ISA is from an investment firm – such as an investment platform, wealth manager or Independent Financial Adviser (IFA) – the limit is £85,000 per person, per eligible firm.

Some banking brands are part of the same group and could share a banking licence. For example, Halifax and Bank of Scotland are different brands but part of one banking group. and share one ‘banking licence’. 

If you have more than the limit within the same bank or deposit-licence organisation, consider moving the excess to make sure your money is protected. You can check if your banks share a licence and find out how much of your money is protected with the FSCS’s Bank & Savings Protection CheckerOpens in a new window

But you won’t get any compensation if your investments fall in value.

You can buy an ISA:

• directly from an ISA provider
• directly through a fund manager
• directly from discount brokers, fund supermarkets or a bank
• from a regulated financial adviser or financial planner
• through an online share account or stockbroker.

Check any charges as these might vary for the same product depending on where you buy it. 

If you’re not sure what kind of investments would suit your personal goals and needs, talk to a regulated financial adviser.

Investments that pay interest (like government and corporate bonds), or rental income (like some property funds) provide 100% tax-free income if held within an ISA.

Any dividends received from your ISA are free of Income Tax.

Whatever income you get from your ISA, it doesn’t need to be declared to HMRC and it will not have an impact on your Income Tax allowances.

Also, any profit you make when selling investments in your stocks and shares ISA is free of Capital Gains Tax.

Any losses made on your investments in your stocks and shares ISAs can’t be used to offset capital gains on your other investments.

See How tax on savings and investments works for more information.

If you’re unhappy with the service you receive or want to make a complaint, start off by contacting your provider or adviser.

Most fund managers and ISA managers are regulated by the Financial Conduct Authority This means that if your complaint is not resolved to your satisfaction, you can take it to the Financial Ombudsman Service