A stocks and shares ISA is a tax efficient investment account, with any profit gained being exempt from income and capital gains tax. However, unlike a cash ISA where you will get back at least what you put in, the value of an investment in a stocks and shares ISA may go down as well as up.
To be eligible you must be a UK resident aged 18 or over.
Advantages of a Stocks and Shares ISA
- Potentially higher returns than a Cash ISA
Due to the nature of investing in a broad range of assets, a stocks and shares ISA can potentially offer higher returns than a cash ISA. The stock market over a long period of time has typically outperformed many other types of investments and savings accounts. However, you should be aware that this isn’t without risk. If the stock market falls you could stand to lose money, including your original investment.
- Tax efficient but not tax free
Unlike a Cash ISA, a Stocks and Shares ISA is not completely tax free. Whilst you do not have to pay income or capital gains tax on any growth on your investment, you are still subject to 10% tax on any income on share dividends (outside of your tax-free dividend allowance which is £5,000 for the 2017-18 tax year)
Disadvantages of a Stocks and Shares ISA
- Your investments can fall in value
Due to the fluctuating nature of markets, there is no guarantee that the value of your investments in a stocks and shares ISA will rise. More importantly, you must be aware that there is a chance that you could see the value fall. Therefore, a stocks and shares ISA should be viewed as a long-term investment, ideally of at least 5 years.
Based on the investment approach you take and your choice of ISA provider, you will be required to pay charges. Generally, if you opt for the self-select approach, these charges will tend to be lower than those of a fully-managed portfolio. Dependent on the provider, a stocks and shares ISA can be subjected to the following: management fees; portfolio fees; charged on buying and selling shares; and fees for exiting the investment.
Compare Stocks and Shares ISA Providers
Below are the available Stocks and Shares ISA providers on OFF3R:
|The IG Markets Share Dealing ISA allows you to buy and sell UK shares for just £5 commission when you place 10 trades the previous month – or just £8 as standard. This is a flexible ISA with no annual or transfer fees.||Go to Site|
|The Munnypot Stocks & Shares ISA is provided in combination with automated online investment advice to monitor an investor’s investment with the aim of achieving their goals.||Go to Site|
|The AJ Bell Youinvest Stocks & Shares ISA is a low-cost, easy to use self-select investment ISA. You can choose from a wide range of investments including over 4,000 funds (unit trusts and OEICs), investment trusts and exchange traded funds.||Go to Site|
|The Charles Stanley Direct flexible stocks and shares ISA allows you to take money out of your ISA (a ‘withdrawal’) and pay the money back again (a ‘replacement’) within the same tax year, without affecting your annual ISA limit for new subscriptions.||Go to Site|
|The True Potential Investor Stocks & Shares ISA allows you to invest up to £20,000 in this tax year. You can withdraw at anytime, and reinvest back into the ISA within the same tax year, without it counting towards your annual allowance.||Go to Site|
|The Hargreaves Lansdown Vantage Stocks & Shares ISA offers an easy-to-manage, tax-efficient solution giving you access to a wide range of investments and tools.||Go to Site|
|Wealthsimple is a digital investment manager on a mission to make smart investing accessible, simple and affordable for everyone.||Go to Site|
|The Moneyfarm Stocks & Shares ISA allows you to grow your medium-term savings tax-free, with the flexibility to withdraw or transfer funds whenever you want.||Go to Site|
|Nutmeg experts diversify your investments across asset classes and geographies, to spread your risk and maximise your returns.||Go to Site|
Please head over to the OFF3R Stocks and Shares ISA channel for a more detailed comparison of the Stocks and Shares ISA’s available.
Investing in or lending to early stage businesses involves a high level of risk, including illiquidity (inability to sell assets quickly or without substantial loss in value), lack of dividends, loss of capital and dilution risks and it should be done only as part of a diversified portfolio. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Your capital is at risk.