Stocks and Shares ISAs
An ISA is a tax wrapper that can protect your savings and investments from certain taxes. In the 2016/17 tax year your ISA allowance is £15,240.
Tax advantages of a Stocks and Shares ISA
As well as protecting your investments from these taxes, you will also only pay tax on dividends at a fixed rate of 10% regardless of which tax band you fall into.
What investments can you hold in a Stocks and Shares ISA?
In addition to individual stocks and shares, you can also hold other types of investments within a Stocks and Shares ISA, such as:
- Investment funds – units in a professionally-managed collective investment
- Investment trusts – a company set up to hold selected investments, which you can buy shares in
- Government bonds – debt issued by national governments around the world
- Corporate bonds – debt issued by companies
Choosing the right type of investment to suit you will depend on a number of things including your attitude to investment risk, and whether you are looking to generate capital growth or an income from your investment.
ISA rules and allowances
You can use up to your full ISA allowance – which for the 2016/17 tax year is set at £15,240 – to invest via a Stocks and Shares ISA, save into a Cash ISA, or a combination of the two.
Each tax year you get a new ISA allowance, so over time it's possible to hold a substantial amount in investments through a Stocks and Shares ISA. You can transfer from a Cash ISA into a Stocks and Shares ISA, and vice versa, subject to the terms set by your product provider.
Ready to invest?
If you're comfortable choosing your own investments to go in a Stocks and Shares ISA, you can open your ISA today through a platform such as Hargreaves Lansdown, Barclays Stockbrokers or Interactive Investor (ii).
If you want to find out more about investing, start here with our guide to investing for beginners. For bespoke advice on choosing investments to suit your needs and goals, speak to a financial adviser.
Last updated: 04 June 2015