Either way, the underlying investment decisions regarding specific company shares are taken by the manager, with no need for you to be involved.
One option that might be considered by those aged 18-39 is the Lifetime stocks and shares ISA, which includes a government bonus of 25% of any investment made each tax year. The maximum investment each year is £4,000.
If you would prefer to be more hands-on and pick your own stocks and shares to house within your tax-efficient ISA wrapper, see our Self-select ISAs page.
It’s worth bearing in mind that any investment in the stock market, whether managed on your behalf or otherwise, should be seen as a long-term proposition. Many investment specialists recommend investing over a minimum five-year period. If you can’t tie up your money for five or more years, or if you can’t stomach the risk of getting back less than you invest, then a savings account is probably more appropriate for you.
Understand the risks. The value of your investment and the income derived from it can go down as well as up and you may get back less than you originally invested. The tax advantages of ISAs may change in the future and also depend on your individual circumstances.
MoneySuperMarket doesn’t offer a comparison service for this type of product but we have compiled a list below of providers who can help.
Product information supplied has been provided by each individual brand not MoneySuperMarket.
Stocks & Shares ISAs : Ordered A – Z
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Stocks and Shares ISAs explained
ISA rules were changed in July 2014, and again in April 2016, meaning there is now greater flexibility on investments and transfers.
It’s named an ISA, but a stocks & shares ISA is very different to a cash ISA, which is simply a savings account you don’t pay tax on. With a stocks & shares ISA you're investing in financial products such as corporate and government bonds, shares and funds.
In the 2018/2019 tax year, you can invest up to £20,000 into an ISA. This can be invested in cash or stocks and shares, or a combination of both.
Range of assets
A stocks and shares ISA offers the potential for higher returns than a cash deposit and you can invest in a broad range of assets including shares, bonds, commercial property and commodities. But stocks and shares ISAs are riskier than cash plans. If the stock market crashes or the property market implodes, you could lose all your money, including your original stake.
Most people opt for an ISA run by an experienced manager, but others prefer to take control of their investments with a self-select ISA. It’s worth bearing in mind, however, that self-select ISAs are really only suitable for experienced investors with a full awareness of and stomach for the risks involved.
The big advantage of a stocks and shares ISA is, of course, the shelter from capital gains tax (CGT). You would normally pay CGT on any profits above £11,700 a year when you sell, but assets in an ISA are free from CGT.
Since the start of the new tax year on April 6, 2018, the annual tax-free dividend allowance for taxpayers reduced to £2,000. Dividend income above this allowance is taxed at new, higher rates.
When your dividend income goes above £2,000, the amount of tax you’ll pay will depend on which income tax band you’re in. Add your dividend income to your other taxable income to work out what your overall tax band will be. Once you know this, you will need to inform the HMRC so they can change your tax code. If your dividend goes above £10,000 you will need to fill in a Self-Assessment tax return.
Watch out for charges on stocks and shares ISAs. Some funds levy an initial fee of up to 5%, plus an annual management charge of around 1%, which can eat into investment returns. You might also have to pay an adviser’s fees on top. But if you don’t need advice, you can probably buy your funds cheaper though a discount broker or a fund supermarket.
The Financial Services Compensation Scheme covers ISA investments up to £50,000 if your ISA manager should go bust. But remember, the FSCS does not compensate for poor performance. Cash ISAs are protected up to £85,000 by the FSCS, as of 30 January, 2017.
How it works
We want to show Stocks and Shares ISAs from as many providers on the market. We can't promise to have Stocks and Shares ISAs from every single provider, because some don't want to be included on comparison websites. We list these Stocks and Shares ISAs alphabetically from A to Z. You can find out more about how we work here.