Stocks & Shares ISAs

When it comes to investing, there are no guarantees. Past performance is not a reliable indicator of future results. Your investments can go down and up in value, so you could get back less than you put in. It is generally recommended that you hang on to your investments for at least five years, to give your investments the best chance of providing the returns you’re hoping for. Even if you wait five years, you might still get back less than you put in. It would help if you were comfortable with this before you begin.

It is a two-stage process. First, you need to pick a provider to buy your ISA from. Then, you need to decide what investments to put in it.

1. Who are the providers?
   ‍You can buy a Stocks & Shares ISA from providers such as banks, building societies, stockbrokers, fund supermarkets, fintechs and other financial institutions. The specific provider you choose will depend on your objectives, investing savviness and personal circumstance. You may use our top picks provider list below as a general guide and starting point to  understanding investment providers.
2. How do I decide what investments to put in?
   ‍Most providers will give you a wide range of assets to pick from, such as shares, corporate bonds, gilts and funds. Most people use funds when investing because they save you the trouble of buying shares in multiple companies and building a diversified portfolio of bonds and other assets. Some providers offer just an exhaustive range of funds, while others offer shares and investment trusts (ITs) in addition to funds. Depending on your circumstance, you may need a qualified financial adviser to help you build your portfolio or provide some guidance. 
   

1. Shares
   When you buy a share, you own a small unit of a public company. So, if you buy a share in Apple, for example, you become a part-owner of Apple. If it performs well, you'll benefit from its success. If it doesn't, you may lose some money. Shares are also called equities or stocks. Click here to learn more about investing in shares.
2. Corporate Bonds
   When you invest in a corporate bond, you are lending money to a company in return for interest.
   
3. Government Bonds
   ‍When you invest in a government bond or gilt, you are lending money to a government in return for interest.
4. Funds
   ‍Instead of buying individual shares, bonds, or other assets directly, you can choose to invest in a fund. A fund pools money from you and other investors, and a specialist fund manager invests this money in assets such as shares, bonds, properties or commodities (gold, oil, agriculture, etc.). Most people, including those who are experienced investors, use funds when investing. Click here to learn more about investing in funds.
5. Interest
   ‍‍Interest is the money you earn for investing.
6. Dividends
   ‍‍When a company whose shares you own makes a profit, they might send some of it to you. This is called a dividend. A dividend is your share of the company's profit.
7. Returns
   ‍‍Returns may refer to interest or dividend or both.

Yes. We've outlined the main charges below, focusing only on the fees charged by funds providers. Share-dealing platforms charge pretty similarly, so you need not worry about that for now.

1. Annual Platform Fee
   ‍‍This is charged by the investment provider for providing a platform for you to invest.
2. Annual Management Fee
   ‍‍Also known as Ongoing Charge Figures (OCF) or Total Expense Ratio (TER). This is the fee paid directly to the fund manager responsible for managing your funds. When you invest in funds, you typically select a few funds to invest in. If you selected three different funds, for example, you would be required to pay a management fee on each fund.
   
3. Annual Investment Cost
   ‍‍Some providers display this cost as the annual management fee plus a market spread or just the market spread.
4. Trading Fees
   ‍Also known as dealing fees. This is the fee for buying and selling funds or other types of investments on the platform. It usually ranges from £0 to £25. If you plan to buy and sell a lot, you would probably be interested in platforms with lower trading fees.
5. Transfer Out Fees
   ‍Also known as exit fees. It is the fee you pay for moving your investments from one provider to another. Consider, for example, if you decide to move your investments from AJ Bell to Barclays, you’ll need to pay an exit fee. That said, not all platforms charge an exit fee. But the ones that do, typically charge per fund or holding. You want to be mindful of that.
6. Advice Fee (Optional)
   ‍This is only paid if you opt in for personalised financial advice.

Yes, you can. However, if your Cash ISA provider is different from your current Stocks & Shares ISA provider, you’ll need to inform your Cash ISA provider of the transfer. Do not simply withdraw the money, as doing so will cost you all the tax-free benefits.

Yes, you do. However, any money above the £20,000 ISA allowance must be invested in a general investment account (non-ISA) and subject to different tax rules. You should be able to open a general investment account with most ISA providers. If you choose to do so this tax year, you'll enjoy tax benefits as follows:

• Capital Gains Tax (CGT) Allowance
  CGT is the tax you pay on the gains you make from selling shares, a second home or jewellery. This tax year, you are allowed to make £12,300 of gains tax-free. So, your Stocks & Shares ISA would only be useful to you if you make total gains over £12,300. That said, a rule of thumb is to always put the maximum amount in the tax-free account. This means you should take advantage of the Stocks and Shares ISA, even if you think you won't make up to 12,300 gains. Note that once you've used up the CGT allowance, you would be subject to tax at 10% for basic-rate taxpayers and 20% for higher-rate and additional-rate taxpayers.
• Dividend Allowance
  The first £2,000 you receive in dividend this tax year is tax-free. After which you would be subject to tax at 7.5%, 32.5% and 38.1% for basic-rate, higher-rate and additional-rate taxpayers respectively.
• Personal Savings Allowance‍
  Your personal savings allowance also includes your normal savings interest in a bank and other forms of interest. If you invest in corporate bonds outside your Stocks & Shares ISA, you'll enjoy tax-benefits this tax year as follows: 
  

• Basic-rate (20%) taxpayers will be able to earn up to £1,000 interest tax-free.
• Higher-rate (40%) taxpayers will be able to earn up to £500 interest tax-free.
• Additional-rate (45%) taxpayers have no tax-free allowance.