In this video, James Igoe, an Investment Manager at Redmayne Bentley, and Tess Williams, Head of Financial Planning at Redmayne Bentley, explore the topic of ISAs, in particular the Stocks and Shares ISA, commonly asked questions and some helpful insights on the options available.
Capital at risk.
What is a Stocks and Shares ISA?
An ISA is a UK savings or investment account that can be used to shelter money held within it from tax.
You do not pay tax on any interest or income generated from the funds held within an ISA, and you do not pay Capital Gains Tax on investments held within an ISA.
Within a
Stocks and Shares ISA you can own any investment you want to as long as it exists on a regulated stock market.
Stocks and Shares ISAs can also include unit trusts and investment funds, corporate bonds and government bonds.
Who can open a Stocks and Shares ISA or Junior Stocks and Shares ISA?
You must be 18 to open a Stocks and Shares ISA, or
Junior ISAs (JISAs) are available from birth to 18.
Parents or guardians can open a JISA, but the money belongs to the child. The child can take responsibility for the account from 16 onwards but cannot release the money until they turn 18.
Stocks and Shares ISA rules | Investing
- Every UK resident over 18 has an annual ISA allowance
- In the current tax year (6th April to 5th April the following year), up to £20,000 can be invested in a Stocks and Shares ISA
- The savings limit for JISAs is £9,000
Can I have more than one Stocks and Shares ISA?
You can contribute to more than one Stocks and Shares ISA in the same tax year, but you can still only pay in a total of £20,000
. For example, you could opt to put £10,000 in one Stocks and Shares ISA and £10,000 in one with another provider.
You can also choose to split up your allowance and put money into Cash ISAs, or both types. It is up to the individual how they divide up their allowance. For example, you could opt to put £10,000 in one Stocks and Shares ISA, £5,000 in another Stocks and Shares ISA with another provider and £5,000 in a Cash ISA.
However, JISA’s are slightly different, not only does the account belong to the child, but they are only able to have one Stocks and Shares JISA and one Cash JISA at any point in time. You can move them between providers.
What makes Stocks and Shares ISAs tax efficient?
You do not pay tax on any interest or income generated from the funds held within an ISA, or capital gains from investments in an ISA.
By investing within an ISA each year, you can hope to grow the amount of your wealth that is not subject to Income Tax or Capital Gains Tax during its lifetime.
Other types of ISAs
There are Stocks and Shares ISAs, Cash ISAs, Lifetime ISAs, Innovative Finance ISAs, Help to Buy and Junior ISAs or JISAs.
The Help to Buy ISA can’t be taken out anymore and Lifetime ISAs are only available for 18-40-year-olds and it has other limitations.
It may help to seek financial advice to ensure the product meets your needs.
What are the risks with Stocks and Shares ISAs?
It’s always important to remember that, as with any kind of investment, the value of investments can go up as well as down and for this reason it might be useful to view Stocks and Shares ISAs as a medium-term to long-term investment and seek appropriate advice and ensure your holdings are kept under review.
People may also think that Stocks & Shares ISAs are more risky than other investments.
The Stocks & Shares ISA is simply a tax-efficient wrapper and the type of investment, or cash, that you put in them is entirely up to the individual.
One downside of ISAs compared to pensions is that, with the exception of the Lifetime ISA or the old Help to Buy ISAs, there is no tax relief from the Government on the funds you pay in.
There may be other types of ISAs or savings options that would better suit your circumstances and you may wish to speak to a professional to better understand these options.
For further information about our services,
contact Redmayne Bentley
The latest Government information about Stocks and Shares ISAs is available here:
Individual Savings Accounts (ISAs): Overview - GOV.UK (www.gov.uk)
The latest information about Junior Stocks and Shares ISAs (JISAs) can be found here:
https://www.gov.uk/junior-individual-savings-accounts
Please note that tax treatment depends on the specific circumstances of each individual and may be subject to change in the future.
The value of your investments can go down as well as up, so you could get back less than you invested. Past performance is not a reliable indicator of future performance.
This communication is for information only and does not constitute a recommendation or financial advice.