Stocks and Shares ISA FAQs
We answer some of your most frequently asked questions about the Stocks and Shares ISA.
General Stocks and Shares ISA FAQs
How does a Stocks and Shares ISA work?
A Stocks and Shares ISA allows you to invest in the stock market in a tax-efficient wrapper. You can invest in shares, funds, investment trusts, bonds, gilts and ETFs, amongst other things.
You can choose what you invest in, how frequently you put money in and how much you invest, up to an ISA limit of £20,000 for this tax year.
Stocks and Shares ISAs are usually more suitable for people who are willing to invest over a longer time period. This allows for any bumps in the market that may see your investments fall in value to even out. If you're only looking to save for a short period of time, a Cash ISA may be more suitable for you.
There are also potential tax benefits to investing in a Stocks and Shares ISAs. For example:
- You won't pay UK capital gains tax on gains made within a Stocks and Shares ISA
- Dividend income received on shares held in a Stocks & Shares ISA is free from UK income tax
- You don't pay UK income tax on interest from corporate bonds
The value of, or income from shares can go down as well as up and you may not get back the original amount you invested.
What types of Stocks and Shares ISAs are there?
There are several types of Stocks and Shares ISA offered by The Share Centre depending on your circumstances, investment knowledge and attitude to risk.
For first-time home buyers or people looking to save for retirement and supplement their pension, a Stocks and Shares Lifetime ISA might be the most suitable option.
If you're looking for a tax-efficient way to invest in the stock market and want to have more control over what you invest in, a Self-select Stocks & Shares ISA may be right for you.
Alternatively, if you're less experienced in investing or are happy to leave the investment decision-making to the experts, a Ready-made ISA may be more suitable. You can choose from the three ES Share Centre Multi Manager funds, which reflect your investing objectives:
- ES Share Centre Multi Manager Income Fund
- ES Share Centre Multi Manager Growth & Income Fund
- ES Share Centre Multi Manager Growth Fund
If you want to invest some money on behalf of your child to give them the best start on their journey into adulthood, you may be interested in a Stocks and Shares Junior ISA (JISA). Like our adult Stocks and Shares ISAs, these come in two forms at The Share Centre - DIY Junior ISA, for those who want to be in control of choosing, buying and selling your child's investments, and Ready-made Junior ISA, where our experts hand-pick and manage your child's investments for you in the ES Share Centre Multi Manager Growth & Income Fund.
View our full range of share dealing accounts here.
What is a flexible Stocks and Shares ISA?
A flexible Stocks and Shares ISA means that you can withdraw money from your ISA and put it back in to the same ISA later in the same tax year without it affecting the overall ISA allowance for that tax year.
If, for example, you have subscribed £5,000 to your Stocks and Shares ISA in this tax year, you will have £15,000 left in your allowance. If you then withdraw this £5,000 and put it back in the same tax year, the amount left in your allowance is still £15,000.
All Stocks and Shares ISAs from The Share Centre (excluding Lifetime ISAs and JISAs) are flexible. Please note that this facility is not offered by all ISA providers, so do check before making a withdrawal.
What is the Stocks and Shares ISA allowance for this tax year?
The ISA allowance for 2020/2021 is £20,000. This means that between 6 April 2020 to 5 April 2021 you can subscribe a maximum of £20,000 into a combination of a Stocks and Shares ISA, a Cash ISA, an Innovative Finance ISA, and if you are eligible, up to £4000 of your allowance into a Lifetime ISA.
Remember, you can pay part or all of your allowance into one of each type of ISA each tax year. So you can split your £20,000 allowance between a Stocks and Shares ISA and a Cash ISA, but you cannot split your allowance between two Stocks and Shares ISAs.
Account opening FAQs
Who can open an ISA?
Anyone aged 18 or over who is a UK resident or a Crown servant (or spouse/civil partner of one) can open a Stocks and Shares ISA. It cannot be opened with someone else or on behalf of someone else.
Each tax year, you can spread your ISA allowance across the four different types of ISA (Cash, Stocks & Shares, Innovative Finance ISA and, if you are eligible, Lifetime ISA). But you can only open and subscribe into one of each type per tax year.
For example, you could open and subscribe into a Lifetime ISA and a Ready-made Stocks and Shares ISA in the same tax year. But, you cannot open or subscribe into a second Ready-made Stocks and Shares ISA until the next tax year.
If you were looking to open and subscribe into multiple types of ISA, they don’t all have to be with the same provider. You could have a Cash ISA with a bank and also subscribe into a Stocks and Shares ISA with a stockbroker.
You can then open accounts for the new tax year with someone else, and either leave your old ISAs where they are or transfer them across to your new provider. Transferring between providers doesn’t affect your annual allowance, but do check with the provider if there is a transfer out charge.
No matter how many ISAs you have, you cannot subscribe more than the annual ISA allowance. This is set at £20,000 for the current tax year.
What's the minimum amount I need to open a Stocks and Shares ISA?
Different ISA providers will have their own rules on how much you need to subscribe when you first open a Stocks and Shares ISA. You will likely also be charged for deals you make after the ISA is open.
The Share Centre does not have a minimum amount required to open a Stocks and Shares ISA, although there may be minimums applied to certain payment methods. For example, if you’re setting up a Direct Debit it will need to be for at least £25 a month.
View our Dealing Options and Costs page for more information about the costs around placing a deal.
Can I open or top up a Stocks and Shares ISA for someone else?
You cannot open or hold an adult ISA with or on behalf of someone else.
If you have power of attorney over someone you may be able to subscribe into their ISA but you should check with your provider first.
Can I open a Stocks and Shares ISA for a child?
You can open a Stocks and Shares Junior ISA for your child. This allows you to save on their behalf and build up a pot of money ready for their 18th birthday.
Only the parents or legal guardians can open a Stocks and Shares Junior ISA and the money can only be accessed by the child when they turn 18.
Please note that the child can only have one Stocks and Shares Junior ISA until they turn 18, so do check with any other person with parental responsibility before opening one. Your child can also open their own Stocks and Shares Junior ISA if they are 16 or over, so do speak to them about their accounts to avoid a breach of HMRC rules.
View the Stocks and Shares Junior ISA page for more information.
Account management and Paying in FAQs
Can I withdraw money from a Stocks and Shares ISA?
Depending on your type of Stocks and Shares ISA, you can often withdraw your money at any time and without charge.
If you have a Self-select Stocks & Shares ISA, or a Ready-made Stocks and Shares ISA you can sell your funds and shares whenever you want, and get the proceeds paid into your bank account. Depending on how quickly you want the money there may be a charge attached.
If you have a Stocks and Shares Lifetime ISA, you will incur a 25% government withdrawal fee on all the money you withdraw unless you are:
- using it to buy your first home
- 60 years old or older
- terminally ill with less than 12 months to live
If you have a Stocks and Shares Junior ISA, the money cannot be withdrawn until the child's 18th birthday, at which point it comes under it comes under the ownership of the child. However, they can take control of the investments from the age of 16.
Do I have to pay tax on a Stocks and Shares ISA?
With most forms of saving and investment, any interest or income received, or any gains you make are subject to tax. This can make a significant dent in the overall return you receive. With a Stocks and Shares ISA, your investments will be placed into a tax-efficient ISA wrapper, meaning there is no UK Capital Gains Tax (CGT) or further UK Income Tax to pay, as long as you keep the investments within the ISA.
You don't pay Capital Gains Tax on gains made within an ISA
Not only are any sales or disposals made within your ISA free from UK Capital Gains Tax, but you do not need to declare the account to HMRC on your tax return.
Dividends are free of UK income tax
Ordinarily, if you held shares in a company and received dividends, the first £2,000 per year would be free of UK income tax, but after that you would pay tax. With a Stocks and Shares ISA, dividend income received from shares is free of UK income tax. Should you invest in non-UK holdings, your income may be subject to tax at source by the country of issue.
You don't pay income tax on interest from corporate bonds
If you invest in corporate bonds within a Stocks and Shares ISA, you won't have to pay UK income tax on the interest you earn. However, should you invest in non-UK holdings, again your income may be subject to tax at source by the country of issue.
So, income and profit made within a Stocks and Shares ISA does not need to be included within your CGT, Dividend Allowance or Personal Savings Allowance calculations.
How much does a Stocks and Shares ISA cost?
The cost of a Stocks and Shares ISA will vary depending on what type you choose and your ISA provider.
With our Self-Select Stocks & Shares ISA, you’ll never have to worry about your fees rising with your success. You only pay a fixed monthly account fee of £5.00 per month and you can choose the dealing option to suit you.
If you decide to open a Ready-Made ISA, there are no monthly account fees, no dealing fees and no initial fund charges, so what you pay in is what gets invested.
For information on The Share Centre Stocks and Shares ISA fees, visit the individual product pages.
How do I pay into my Stocks and Shares ISA?
You can subscribe into your ISA via lump sum investments or by drip feeding money in on a regular basis. We can accept individual payments via debit card on our website or over the phone, as well as bank transfers and cheques. Regular payments can also be made with a Direct Debit.
By investing the same amount of money each month, you buy more shares when the price is lower and vice-versa. As such, you don't have to worry about getting the timing of purchases right and, over time, you will have effectively bought your shares at an average price. The easiest way to achieve this is by setting up Regular Investing with your Direct Debit.
Find out more about paying in.
Can I transfer a Cash ISA to a Stocks and Shares ISA?
You may be able to carry out an ISA transfer, but it depends on your provider.
All ISA providers must allow transfers out, but they are not required to allow transfers in. So if you're looking to transfer Cash ISA to a Stocks and Shares ISA you'll have to find a provider that supports the move.
For money you invested in previous years, you can choose to transfer all or part of your ISA but if you are looking to transfer money you’ve saved or invested in an ISA during the current year, you must transfer all of it.
Transferring does not use up any more of this year's ISA allowance.
To start the process, contact the ISA provider you want to move to and fill out an ISA transfer form to move your account. To transfer your ISA to The Share Centre, all you need to do is print and complete our ISA Transfer form and send it to us. We’ll take care of the rest.
Do not withdraw your cash during this process, as money taken out of the ISA wrapper loses its tax-efficient status.
Can I transfer my Stocks and Shares ISA to a new provider?
You can transfer your Stocks and Shares ISA in one of two ways – by 'in specie' transfer or cash transfer.
An 'in specie' transfer means that all investments held in your Stocks and Shares ISA are moved to your new provider as they currently are. You stay invested throughout the process. Although this can take several weeks to complete, if you're happy with your investments then it is likely the best option. Please note that your new provider may not offer the same investments on their platform and will discuss your options with you.
When you are doing a cash transfer, your investments are sold and the proceeds passed to your new provider. The ISA status of your cash remains in place throughout the process – your new provider will reinvest your money when instructed to do so. Cash transfers are typically quicker, but your money will be out of the market, meaning that if shares go up, you could miss out on some of the gains. Nevertheless, if you intend to use your transfer as an opportunity to give your portfolio a fresh start, transferring as cash is the logical option.
Please note, if you are transferring into one of our Ready-Made ISAs, this must be done as a cash transfer.
Crucially, transfers do not count as new contributions for the current tax year, so you can move money invested in previous tax years in addition to making new ISA contributions. It should be noted that some providers will require you to pay an exit fee when you transfer an ISA.
Can I transfer my ISA to another person?
You cannot transfer your ISA to another person. You can withdraw and gift either the assets, or sale proceeds, to another person, who would then be able to utilise the assets to fund their own ISA subscription, subject to their annual allowance.
Can a Stocks and Shares ISA be transferred upon death?
There are specific rules surrounding how an ISA is treated on the death of its owner. Depending upon the date of death, the surviving spouse may receive an additional ISA allowance relating to the value of the deceased’s ISA. Should the surviving spouse have inherited the ISA assets, it is possible that these can be transferred into an ISA in their own name as part of the additional ISA allowance. In the unfortunate event of the death of a client, our Estates team will provide all the relevant information and support to the family and Executors for the deceased.
Find out more about Estates administration and probate.
Can I close a Stocks and Shares ISA?
This depends on the type of Stocks and Shares ISA you have with us. If you have a Ready-made or Self-select Stocks & Shares ISA you can sell your shares and withdraw your money at any time.
If you have a Lifetime ISA you can withdraw your money but you will incur a 25% withdrawal fee on any money you withdraw unless you are:
- using it to buy your first home
- 60 years old or older
- terminally ill with less than 12 months to live
You can also cancel your Lifetime ISA application if it is within 30 days of opening it.
Are Stocks and Shares ISAs safe?
Because you're investing in the stock market the value of your investments could go down as well as up. The level of risk in your Stocks and Shares ISA will depend on the investments you choose or the fund type you have subscribed into.
Are Stocks and Shares ISAs covered by FSCS?
Stocks and Shares ISAs from The Share Centre are covered under Investments. Find out more on the FSCS website
Will Brexit affect my Stocks and Shares ISA?
Because Stocks and Shares ISAs are investments, any changes to the stock market have the potential to affect your ISA value, both positively and negatively. There may also be changes to the companies and funds that you can invest in.
To find out more about the potential effects of Brexit, read our How could Brexit affect my account page.
How long should I invest for?
When thinking about investing, it will always depend on your individual circumstances, but most places will talk about investing for the long-term. As a rule, it's usually recommended to invest for at least 5 years. This allows you to ride out any ups and downs in the stock market. Historically, in the long-term, stocks and shares have outperformed money in cash savings, but there is always risk involved in the stock market as investments can go down as well as up. This is why long-term investing is often recommended.
For more information and to download our free investment guides, see our Guide to investing section.