Stocks and shares ISAs explained (2026/27)

What is a stocks and shares ISA?

A stocks and shares ISA is a tax-free wrapper for your investments. The ISA itself isn't an investment. It's the account that holds them. Inside it, you can hold funds, shares, bonds and other investments, depending on your provider.

The tax benefits

Outside an ISA, you may pay tax on dividends above £500 a year and on gains above £3,000 a year. Inside an ISA, you don't pay tax on any dividends, interest or gains, and you don't need to declare them to HMRC.

These benefits can seem small at first, but they add up as your investments grow over the years.

How the allowance works

In the 2026/27 tax year, you can pay up to £20,000 into ISAs in total. You can put it all into a stocks and shares ISA or split it with a cash ISA or Lifetime ISA. You can also have more than one stocks and shares ISA, as long as your total payments stay within the allowance.

The allowance resets on 6 April each year and doesn't carry over. If the cash ISA limit falls to £12,000 for under-65s as planned from April 2027, you'll still be able to put the full £20,000 into stocks and shares ISAs.

Ways to invest inside an ISA

Choose your own investments: you pick the funds or shares yourself. This gives you the most control and is often the cheapest option.
Ready-made portfolios: you choose a risk level and the provider offers a ready-built mix of investments.
Managed portfolios: the provider manages your investments for you, usually for a higher fee. This isn't the same as personal financial advice.

What to compare between providers

Fees: some charge a percentage of your pot, which tends to suit smaller pots. Others charge a flat fee, which can work out cheaper for larger pots. Fund charges are added on top.
Investment choice: whether the provider offers what you want to invest in.
Minimum amounts: how much you need to start, and whether you can pay in monthly.
Regulation: check the provider is authorised on the FCA Register.

Moving and withdrawing

You can usually take money out of a stocks and shares ISA at any time, unlike a pension. But your investments may be worth less than you paid when you sell.

To move your ISA to another provider, use the new provider's transfer service. Don't withdraw the money yourself, because it would lose its tax-free status.

Is your money protected?

If an authorised investment firm fails, the FSCS may be able to compensate you, up to a limit. But no scheme protects you from your investments falling in value.

Common questions

Can I have a cash ISA and a stocks and shares ISA in the same year?

Yes. You can split your £20,000 allowance between them however you like, within the limits for each type.

Is a stocks and shares ISA worth it if I'm a basic-rate taxpayer?

Often, yes. Your investments may grow well beyond the tax-free allowances over time, and everything inside the ISA stays tax-free for as long as you hold it.

What happens if the stock market falls?

The value of your ISA will usually fall too. Over long periods, markets have historically recovered from falls, but there's no guarantee. That's why investing is best suited to money you won't need for at least five years.

Sources

We checked this guide against these sources on 8 October 2026. Rules and allowances can change, so always check the latest position on GOV.UK.

This guide is general information, not personal financial advice. Read our full disclaimer.