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Best stocks and shares ISA in the UK
We've analysed the stocks and shares ISA from the major share trading providers so you can quickly see the stand-outs.
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A stocks and shares individual savings account (ISA) is effectively a wrapper for an investment account that lets you use your annual ISA allowance. This means that you can invest up to £20,000 in each tax year without paying any capital gains tax on your profits. Think of it like a (completely legal) invisibility cloak for up to £20,000 of your investments that hide it from Mr. Tax Man.
You can divide your ISA allowance into a few different types of ISA, including the lifetime ISA, a cash ISA and, if you opened one before they stopped opening new accounts, a help to buy ISA. You can only pay into one of each type of ISA in each tax year.
We’ve analysed the investment platforms we’ve reviewed on our site and found the 2 best stocks and shares ISAs for buying stocks and the 3 best stocks and shares ISAs for robo-advice.
Stocks & shares ISA platforms
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All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
What is an ISA?
ISA stands for “individual savings account”. The difference between saving in an ISA compared with other savings accounts is that any interest you receive isn’t subject to any tax.
Mostly, ISAs are just “wrappers” for savings or investment accounts, kind of like an invisibility cloak that lets you, totally legally, hide your profits from the tax man.
Everyone has an annual limit to how much you can put into an ISA. This is your ISA allowance, and it differs year on year. The 2024/2025 ISA allowance is £20,000. For the savers under eighteen, the annual Junior ISA (JISA) allowance is £9,000.
What is a stocks and shares ISA?
A stocks and shares ISA is a type of ISA which lets you invest your savings in the stock market. As with all ISAs, you can invest up to £20,000 per year tax-free.
If you want to, you can split your allowance between different types of ISAs, such as cash ISAs or Lifetime ISAs (LISAs). You need to ensure that you stay within your allowance.
There are several different ways that you can invest with a stocks and shares ISA.
For example, you might do some research and open an account with a share trading provider and decide that you want to invest in companies that you know or use, like Greggs, boohoo or Barclays. You can choose the shares yourself and manage the investments yourself.
Another option is to choose a managed account and let the experts look after the money for you. You might choose which sector you want to be invested in, or how ethical your investments are, but the experts will keep track on your investments and try to ensure that they perform in the way that you want them to.
You can also get a mix of the two.
With a stocks and shares ISA your money is at risk, but the potential reward is growth on your investments that is higher than your average savings accounts.
Should I open a stocks and shares ISA?
Before you ask this, ask yourself what your financial goals are and what your current situation looks like.
- If you’re able to put money aside and leave it for a long time, then a stocks and shares ISA is a good bet.
But:
- If you have lots of debt, you should look into ways to clear debt first.
- If you might need quick access to the money, you should look into a current account or easy access savings account.
- If you want to build a pot of money and still earn interest, look into simple savings accounts.
- Riskier than a savings account or cash ISA.
Before you open a stocks and shares ISA thinking you’re the next Warren Buffet, you need to weigh up whether you’re willing to take risk that comes with investing.
In the 2008 crash for instance, many people’s stocks and shares ISAs lost a lot of value. We’ve gone into just how badly it hit people’s stocks and shares below.
A simple rule of thumb is this: if your investments are going to keep you up at night, don’t do it.
Some providers, such as IG, Moneyfarm and Fidelity have risk assessment quizzes which give you an indication of how suitable you are for investing.
How much do stocks and shares make?
There are plenty of different ways to work out how much stocks and shares return over a period of time. You can look at the performance of specific providers’ funds to see how they’ve performed over several years or at specific funds. The FTSE 100 is a collection of the top 100 companies on the London Stock Exchange (LSE). Since it started in 1984, the FTSE 100 has risen by 654% in price. This is an annualised return of 5.77%. At the moment, the most you can generally get in returns for a typical savings account is somewhere between 1% and 1.5%.
The returns you’ll receive could differ from these figures. Past performance isn’t indicative of future results. Your returns will depend on how much you invest, what you choose to invest in, and how long you invest for.
Let’s say, for example, you invested £10,000 in the FTSE 100 over a time period of 10 years (this is sometimes called an “investment horizon”).
This graph shows the rough difference between investing your money in the FTSE 100 and putting it in your average savings account. You can toggle to the table to see the numbers in a bit more detail.
Investing in FTSE 100 vs average savings over 10 years
| Year | FTSE 100 return rate (%) | Yearly return (GBP) | Average savings interest rate (%) | Yearly savings return (GBP) |
|---|---|---|---|---|
| 2010 | 12.6% | £11,260 | 2.8% | £10,280 |
| 2011 | -2.2% | £11,012 | 2.75% | £10,563 |
| 2012 | 10% | £12,114 | 2.8% | £10,858 |
| 2013 | 18.7% | £14,379 | 1.77% | £11,051 |
| 2014 | 0.7% | £14,479 | 1.48% | £11,214 |
| 2015 | -1.3% | £14,291 | 1.4% | £11,371 |
| 2016 | 19.1% | £17,021 | 1.23% | £11,511 |
| 2017 | 11.9% | £19,046 | 1% | £11,626 |
| 2018 | -8.7% | £17,389 | 1.18% | £11,763 |
| 2019 | 17.3% | £20,398 | 1.39% | £11,927 |
You can see the FTSE 100 had some good years and some bad years in that time.
2018 stands out as a poor year. Brexit and uncertainty around the US-China trade war put investors off, harming returns.
Then there were some good years. Yay!
The index returned 18.7%, 19.1% and 17.3% in 2013, 2016 and 2019 respectively.
Overall, for the entire 10 year period, the FTSE 100 generated a total return of 103%.
So if you’d invested £10,000 at the start of 2010, you’d have about £20,398 by the end of 2019.
If you had a stocks and shares ISA and had invested in the FTSE 100 index between 2010 and 2019, you’d have made roughly 7.4% a year. Compare that with average interest rates for savings over that time (around 1.5-2%) and you can see why lots of people turn to investing.
You can check out the performance tables for ISA providers on their websites.
The risks of stocks and shares ISAs
It’s not always plain sailing with stocks and shares, sometimes the waters can be choppy, for example, the financial crash in 2008.
The FTSE 100 had a terrible year in 2008, returning -28.3%.
If you’d invested £10,000 in 2008, it would have been worth just £7,170 by the end of the year.
If you’d started investing in 2008 and held your investment until the end of 2017, your annualised return for that 10 year period would be 5.7% due to the heavy losses of the financial crash.
This is why investment returns become more stable and reliable over a longer time horizon. There’s more time to even out the peaks and troughs.
We’re not trying to spook you, just illustrating the impact of losses and the risks that come with investing.
Cash ISA or stocks and shares ISA?
Cash ISAs and stocks and shares ISAs are designed for different purposes.
Cash ISAs are a better place to put your money if you’re likely to need the money in the shorter term. These are suitable if you want to take minimum risk.
Meanwhile, stocks and shares ISAs are the opposite. They allow you the chance to get higher returns over a longer period, as long as you can stomach the risks.
What can you invest in with a stocks and shares ISA?
With a stocks and shares ISA you can invest in a whole load of things. Here are a few examples:
- Corporate bonds. Lend your money to a company in return for interest.
- Government bonds. Same as above, but you’re lending to the government.
- Shares. Invest in individual companies. Having a share is like having one fraction of the company. If the company’s value goes up the share’s value goes up, if not it goes down.
- Funds. These are the most common type of investment. Funds can include shares, bonds and cash, in different combinations.
How do I choose the best stocks and shares ISA?
There isn’t necessarily a “best” ISA to go with as it depends on what you’re looking for and how you’ll use it. Many of the trading apps that we’ve named as the 6 best trading apps have ISA options, so it’s worth checking them out.
What else do I need to know?
- To open an ISA you have to be 18 or older.
- You must be a UK tax resident.
- You can only open one stocks and shares ISA per tax year.
- You can transfer in to most new ISAs for free.
Frequently asked questions
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
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