In this guide
A stocks and shares Isa offers the opportunity to profit from the stock market without having to hand over any of your gains to the tax man.
Opening one via an investment platform will enable you to hold individual shares, actively managed funds, passive funds, ETFs and investment trusts. Selecting your own investments requires plenty of research and knowledge of the markets though. You can lose money as well as make it.
For novices, many providers offer ‘ready-made’ options which will select an appropriate mix of investments for you based on your goals, timeframe and risk appetite.
Here we highlight some of the best offerings available in the market at the moment.
This article explores:
- How to pick the right stocks and shares Isa
- Our top five ready-made stocks and shares Isas
- Our top five self-invested stocks and shares Isas
- What are the fees on a stocks and shares Isa?
Read more: Best cash Isas in 2024
*This article contains affiliate links which earns us revenue
What is a stocks and shares Isa?
As you begin to grow your investment portfolio, there’ll come a stage when you’ll need to start paying tax. This could be for selling your shares, which will incur a capital gains charge, or receiving a dividend payout, where you’ll pay a dividend tax.
These taxes and the allowances are explained in more detail in this guide.
However, if you keep your money invested in a stocks and shares Isa instead you won’t need to pay any tax on your investments.
A stocks and shares Isa is an account where you can invest your money tax-efficiently. This is why you might find it described as a “tax-free wrapper”.
So, to enjoy these advantages, there are a few rules to remember.
No management fees for 12 months with Wealthify
If you’re thinking about opening a stocks & shares Isa, then now could be a good time to do so with Wealthify: your easy-to-use, online saving and investing service. As a Times Money Mentor reader, Wealthify are offering zero management fees (usually 0.6%) for new customers who open any one of their investment products, including Isas, Junior Isas, pensions and general investment accounts.
T&Cs apply. Capital at risk. The tax treatment of your investment will depend on your individual circumstances and may change in the future. Wealthify is authorised and regulated by the Financial Conduct Authority.
How does a stocks and shares Isa work?
Every year everyone above the age of 18 can save or invest £20,000 across a range of Isas. This is known as your “Isa allowance” and you can invest all of it into a stocks and shares Isa if you wish.
You can then use this money to buy stocks, such as Apple or Tesla, or invest in funds which are managed by a professional. Other investments, such as ETFs, are also available.
If you’ve made use of your allowance from previous tax years, you can transfer your stocks and shares Isa to a new provider so your investments all sit under one roof.
Otherwise, new Isa rules introduced this year also mean you can now open as many stock and shares Isas as you wish.
Read more: New Isa rules this tax year
How to pick the right stocks and shares Isa
If you’re unsure where to open your stocks and shares Isa, a great place to start is by considering some of the best investment platforms.
Some investment platforms will suit different types of investors. For example, Dodl by AJ Bell is designed for beginner investors who are looking to manage their funds via an easy app. In comparison, AJ Bell is targeted at more advanced customers who wish to have greater control over their own portfolio.
So, that’s why below we’ve separated the best stocks and shares Isas into two categories. We’ve listed the best ready-made portfolios, which could suit you better if you’re looking for a fund managed by an expert manager, and the best “do-it-yourself” DIY options.
Read more: What is a robo-adviser?
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Our top five ready-made stocks and shares Isas
Our picks include Halifax, which was a shortlisted provider for the Times Money Mentor awards last year, and Dodl, a platform targeted at beginner investors.
Wealthify
Best for a unique offer
New customers pay no management fees (usually 0.6%) for 12 months, when they open any one of Wealthify’s investment products, including a Stocks & Shares Isa, Junior Isa, Pension and General Investment Account. To be eligible, you must apply using the link below.
T&Cs apply. Wealthify is authorised and regulated by the Financial Conduct Authority.
About Wealthify: Owned and backed by Aviva, Wealthify is an easy-to-use, online saving and investing service. Wealthify have one of the slickest apps and online dashboards, meaning it’s easy to manage and track how your money’s performing. Their experts handle everything for you, and you can start investing from as little as £1 for all accounts besides its pensions, which require a £50 minimum deposit.
The platform is straightforward to use with five risk levels to choose from, plus you can opt to go down the ethical investment route.
Wealthify, which is owned by Aviva, charges an annual management fee of 0.6%. Its Original portfolio costs an average of 0.16% on top of this each year, while its Ethical portfolio costs an extra 0.7% over the same period.
It has no hidden costs as it doesn’t charge for withdrawals, depositing money, transferring or closing your plan. You can also try out the app before you sign up.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circumstances and may change in the future.
Halifax
Best for simplified investing
This can make things cheap if you have a large portfolio, although everyday trading may become expensive. This is because a 1.25% foreign exchange fee may applies to every international deal you make, like investing in Apple. If you’re focused on the local market, a £9.50 dealing commission applies to each real time UK trade you make.
It’s a great option if you bank with Halifax because you can view your other finances all under one app. It’s also worth noting that the Bank of Scotland is in the same banking group as Halifax, so it too offers a similar stocks & shares Isa set-up.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circumstances and may change in the future.
InvestEngine
Best for: ETF investing
Coupled with your tax-free Isa wrapper your costs are kept low and simple. It’s only if you choose to invest in one of its managed portfolios when the platform charges a 0.25% ongoing fee.
The platform itself hosts nearly 600 different ETFs, from S&P 500 tracking funds to others invested solely in the Robotics sector.
As an added bonus, if you sign up to its platform and refer a friend you’ll each receive up to £50. T&Cs apply.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circumstances and may change in the future.
Plum
Best for an award winning app
Within this app you can customise your stocks & shares Isa to your liking. You can invest in the US stock market, with companies such as Apple and Microsoft, or you can invest in a fund carefully weighted by experts. These options typically track certain indices, for example “the Medic” fund tracks the pharmaceutical sector.
However, Plum isn’t the cheapest provider on this list. It commands a monthly fee of £2.99 and may charge additional fees depending on the make-up of your portfolio. Funds incur a management fee of 0.45% and potentially a fund manager fee which could be between an additional 0.13% and 0.88% of your portfolio.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circumstances and may change in the future.
AJ Bell Dodl
Best for cheap fees
While the provider doesn’t charge a dealing fee, there are a few other potential charges depending on the make-up of your portfolio. If you have any money invested in funds, including ETFs, you’ll be charged a management fee from your provider and American shares incur a FX charge between 0.25% and 0.75%.
Dodl also offers a slick app too. So if you’re keen on managing your portfolio on the go it can be a great option. Here you’ll be able to invest in a range of shares, funds and ETFs.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circumstances and may change in the future.
Our top five self-invested stocks and shares Isas
Our picks include Vanguard, a multinational firm with access to a range of investing options, and Interactive Investor, which could be a low cost option.
The fee falls to 0.1% for funds between £250,000 and £500,000 and there are no charges on funds over £500,000.
Currently, online share trades cost £5, but this figure soon drops to £3.50 for anyone doing more than 10 transactions a month. It costs £1.50 for online fund trades.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circumstances and may change in the future.
Interactive Investor
LATEST OFFER: Get £50 worth of free trades when you open an account before 30 June*
It’s setup is likened to the “Netflix model”, so it can be the lowest-cost provider if you have a large portfolio. Its subscription service starts at £4.99 a month and if you wish to trade UK or US shares you’ll pay £3.99 per trade.
Once your portfolio’s value exceeds £50,000 you’ll then move onto its Investor plan which charges £11.99 a month but provides a free trade each month.
You’ll also be able to invest in a range of investing options such as funds, fixed income, ETFs, and shares.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circumstances and may change in the future.
*Ts&Cs apply. New customers only.
It also caps the amount it’ll charge for holding ETFs at £7.50 a month, making it an interesting choice if they form the bulk of your portfolio. Other dealing fees apply, and for funds your management fee will depend on your portfolio.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circumstances and may change in the future.
Vanguard Isa
At 0.15%, Vanguard’s platform fee is one of the lowest on the market, and its fund range is also known for its rock-bottom fees.
However, you’re limited to investing in Vanguard’s own products – mainly exchange traded funds (ETFs) and index funds – and there’s no way to trade shares.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circumstances and may change in the future.
IG Stocks & Shares Isa
Best for experienced, high net-worth investors
This is because it allows you to employ a range of investing strategies. If you’re looking to keep your investments simple, then there are likely better options on the market.
Not to mention, its fee structure rewards those who regularly trade. This is because it charges zero commission on US shares if you make at least three trades a month. Although a foreign exchange fee of 0.50% applies, it can save you decent money if you frequently trade.
If you wish to trade UK equities, then there is a £8 fee per trade. This drops to £3 per trade if you make more than three trades a month.
IG’s Isa is flexible, meaning you can withdraw and reinvest your funds throughout the year without forfeiting your allowance.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circumstances and may change in the future. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
What is the best performing stocks and shares Isa?
Unlike a savings account where returns can be compared by rate, the performance of your stocks and shares Isa will depend on the make-up of your portfolio.
If you just invested in the S&P 500 last year, an index which tracks the cumulative performance of the 500 largest companies in the US, then your portfolio would have grown by around 27%. It’s the type of performance which far exceeds the best savings rates on the market, and was mostly driven by the performance of “the Magnificent Seven”.
However, things could have been worse. If your money sat across the FTSE 100, an index which tracks the performance of the 100 biggest companies in the UK, your portfolio would have grown by around 3.8%. It’s less than what some of the best cash Isas delivered in the same period.
In other scenarios you could have lost money. For example if your money was invested in Anglo American, a mining firm, it would have lost around 40% of its value last year.
Remember, that’s the fundamental risk you’re taking by investing. You may earn more than the best savings account but you also may lose your original capital. And since past performance is no indication of future performance, it’s unclear what might be the best performing stocks and shares Isa.
Should I opt for a DIY or ready-made portfolio?
If you are fairly new to investing or are not confident at making your own investment decisions, a ready-made portfolio could be preferable.
This is where the platform will offer you a range of investments based on your attitude to risk.
Charges for ready-made portfolios tend to be relatively straightforward, with most charging a platform fee plus a fund management flat fee.
If you want to build your own portfolio, you’ll need a self-invested stocks and shares Isa.
Most of these will let you hold shares in a wide range of stocks listed on the FTSE 100, Dow Jones and Nikkei 225.
You should also be able to invest in funds and investment trusts, though you’ll need to watch out for the charges that can be attached to these accounts. We list what to look out for below.
Seek advice to grow your portfolio
Remember, it is always better to choose an financial services provider that is authorised and regulated by the Financial Conduct Authority.
If you need a helping hand setting up the Isa, choosing the investments and deciding how much to pay in, Kellands is offering all of our readers a free hour-long session with one of its independent financial advisers. They can get a good idea of your financial goals, and help you take the first step to achieving them.
What are the fees on a stocks and shares Isa?
Just like your returns, the fees on a stocks and shares Isa will depend on your provider and the make-up of your portfolio. That’s why we’ve broken down the fee structure of some of the best providers above.
But for something more generalised here are three common charges to look out for:
1. Platform fee
- Almost all platforms will charge investors a monthly fee. This will usually be a percentage of the money you hold on the site. For example Hargreaves Lansdown charge 0.45% capped at £45 per year while Interactive Investor’s stocks and shares Isa start at £9.99 a month
- Confusingly, different platforms have different names for these charges, such as service fees or custody charges
- Most platforms charge tiered fees, meaning charges are lower for people with larger sums of money.
2. Dealing charges
- If you’re trading stocks and shares, most platforms will charge you for doing so
- Platforms such as Trading212 will let you buy or sell a wide range of stocks for free
- But most platforms will charge a fixed fee per trade, depending on your monthly trades
- Some platforms charge as little as £4.95 a trade, while others are as much as £15.
- There are also different charges for how you trade, with some of the most expensive for phone trades
3. Transfer fees
- While most companies won’t charge you for transferring your investments to them, others will charge you when you leave
- There are costs involved in transferring your investments to another platform
- When you open a new account you rarely think of leaving. But it’s important to check these charges so that you don’t get stung if you ever decide to move on
Important information
Some of the products promoted are from our affiliate partners from whom we receive compensation. While we aim to feature some of the best products available, we cannot review every product on the market.
