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Frequently asked questions

The main difference is that with a Stocks and Shares ISA, your money is invested, while with a Cash ISA, your money is saved as cash. Stocks and Shares ISAs are generally more suited for longer-term savings, while Cash ISAs may be a better option for savings that you may need to dip into regularly or in emergencies.

Read our What is an ISA? guide for more information 

We try to keep our fees as simple and competitive as possible so you get to keep more of your money. 

You’ll pay what’s known as a platform charge, which covers the services we provide to manage your ISA – currently % or £ a year for every £1, invested. 

You’ll also pay a fund charge, which will vary depending on what you choose to invest in. This covers the costs of managing your investments, for example buying and selling shares in companies. For our easy investment option, the current fund charge is % or £2 a year for every £1, invested. 

Find out more about our is it worth investing in stocks and shares isa now and charges 

Current ISA rules allow you to have more than one Stocks and Shares ISA open in your name. But you’re only able to actively contribute to one in each tax year.

Find out more in our guide 

You can take money out of your ISA at any time – either regularly or as a one-off. But occasionally some funds may put restrictions on withdrawals, which may mean you won’t receive your money straightaway.

There’s no fixed time limit that you have to keep money in a Stocks and Shares ISA for. But you should think of a Stocks and Shares ISA as a medium to long-term investment, which means you should usually hold it for at least five years. 

Under ISA rules, there’s a limit on how much money you can save or invest in ISAs in a single tax year. The ISA allowance is currently £20, 

Find out more about ISA rules 

To open a Stocks and Shares ISA, you’ll need to be at least 18 years old, and a UK resident or crown servant, for example working for the diplomatic or overseas civil service. It’s also worth remembering bitcoin investering 8 month you can’t hold an ISA on someone else’s behalf.

You won’t pay capital gains tax or income tax on your ISA investments.

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See how much your Stocks and Shares ISA could be worth in the future, and the impact of changing your payments. 

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In the final hour of the tax year last April, a stocks and shares Isa was opened or topped up every seven seconds on the systems of Britain’s largest retail investment company, Hargreaves Lansdown. There is nothing to focus minds more than a deadline, and the approaching end of the tax year on 5 April means people are increasingly looking at whether they should still opt to open an Isa – or lose the tax-free perks attached.

But with interest rates now so low, is there any point when it could end up delivering such minor gains?

The deadline approaches

When the tax year ends, so does the opportunity for anyone over 16 to put away £20, in an individual savings account for

You don’t have to pay tax on any interest earned on cash, income or capital gains from investments. But when the new tax year clicks in, that £20, allowance goes and you cannot get it back.

Many investors will choose between a cash Isa, which acts like a normal savings account, or a stocks and shares Isa (or investment Isa), where money can be put into funds, trusts and individual shares.

Cash Isas have not had a good time of it lately. Coupled with the fact that they can offer lower rates than other savings accounts, low interest rates set by the Bank of England mean there is little to attract savers.

Financial data site Moneyfacts lists the best return on an easy-access Isa as Al Rayan Bank, which gives %. Meanwhile Goldman Sachs’s Marcus online savings account pays %.

Along with this, since the launch of the personal savings allowance (PSA) inmost savers don’t have to pay tax on their savings income. Someone on the basic rate of tax can receive £1, of interest and not have to pay tax, while a higher-rate earner has a £ PSA.

Hargreaves Lansdown analyst Sarah Coles says a higher-rate taxpayer would need more than £70, in savings before they started paying any interest on the highest one-year (fixed) rate, and a basic-rate taxpayer more than ,

“It’s one reason why over million fewer cash Isas were opened the year after the allowance was introduced,” she says, is it worth investing in stocks and shares isa now. “At the moment, you can get a better rate on the most competitive easy-access Isa than on its equivalent savings account. However, fixed Isa rates are fractionally lower than on savings accounts, so you can see why savers are questioning whether it’s worth it.”

Will markets make the is it worth investing in stocks and shares isa now can be forgiven for being frustrated at the moment as rates continue at rock bottom, and many will be looking towards a stocks and shares Isa to deliver a greater return.

But with that comes the obvious risk of losing money if shares or funds go down. Laith Khalaf, of investment firm AJ Bell, says that investing on the markets through an Isa is more likely to save tax.

“Stocks and shares Isas protect your dividends from income tax, and while everyone gets £2, of dividends tax-free, it won’t take long before a portfolio is breaching that limit.

“The UK stock market usually yields around % to 4%, so a UK portfolio, which isn’t in an Isa, can be expected to be vulnerable to income tax once it reaches £50, to £60,” he says.

“Stocks and shares Isas also protect your profits from capital gains tax, and, while there is currently a fairly generous limit of £12, of gains a year which don’t attract CGT, the chancellor is considering cutting this, and raising rates.”

Coles says that savers who are willing to put their money away for up to a decade, and are comfortable that they are not risk-free, should consider putting some money into a stocks and shares Isa. However, she does not write off cash Isas.

“If you’re a basic-rate taxpayer with a couple of thousand pounds in savings, you’re not going to save tax with a cash Isa this year – but it’s not this year you need to worry about, you’re protecting this cash from tax forever, and, over time, all sorts of things could change,” she says.

“There will come a time when savings rates rise, and if they push you over the tax threshold, you’ll be glad your cash was protected. Likewise, your salary could increase and push you into a higher tax bracket, so your savings allowance halves or vanishes overnight.

“Meanwhile, your savings are likely to build up over the years and run a bigger risk of being subject to tax. There’s also the chance that the government decides to cut, or remove, the savings allowance, leaving savers high and dry if they haven’t sheltered their cash from tax.”

Where to invest

For those who want to get hold of their cash quickly, the best easy-access cash Isa rate is offered by the sharia-compliant Al Rayan Bank, which is paying %, though this is an expected profit, rather than guaranteed interest.

The same bank offers the best one-year fixed rate at %, while Gatehouse Bank – which is also sharia-compliant – has the best two-year and three-year fixed rates at % and % respectively. Over five years, it offers %, the top savings deal according to Moneyfacts.

On stocks and shares Isas, is it worth investing in stocks and shares isa now best-performing investment trust fund was JP Morgan China, which would have turned £1, into £2, after one year. Behind it was the Pacific Horizon Investment Trust, which turned £1, into £2, over the last year.

After that was the Scottish Mortgage Investment Trust, which went from £1, to £2, according to figures from Moneyfacts.

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If you want to invest as tax efficiently as possible, then you might want to consider opening a stocks and shares ISA. 

In the current tax year, you can invest up to £20, in a stocks and shares ISA without paying any income tax or capital gains tax.

In this article, we explain:

Related content: Guide to ISAs: which ISA should I get?

How does a stocks and shares ISA work?

An ISA &#; or individual savings account &#; is a tax-efficient way to save or invest your money. Any growth your money makes inside the wrapper of an ISA is free from the taxman.

A stocks and shares ISA is particularly useful for sheltering investment returns. It means you don&#;t have to worry about income tax, capital gains tax or dividend tax on any profits you make.

You can contribute up to £20, into ISAs in each tax year. We explain more about the rules and different types of ISA in our guide here.

If you opt for a stocks and shares ISA, you can choose which investments to put inside. You can open one with a number of financial institutions including:

Look carefully at the fees and range of investments on offer before opening an ISA. Find out more here.

Some ISAs are better value for those with large amounts of money who want to buy and sell investments frequently. Others are best for smaller, less active investors.

How to invest with an ISA

Broadly speaking, there are two ways of investing with a stocks and shares ISA:

• If you prefer to choose the investments yourself, a &#;self-invested&#; stocks and shares ISA may be a better fit. Find out why Barclays and Vanguard have been given five stars in our independent ratings here.
• You can opt instead for a &#;ready-made&#; stocks and shares ISA where an expert or a &#;robo-adviser&#; picks and chooses the investments for you. We give Nutmeg top marks for its service. Is it worth investing in stocks and shares isa now explain why here.

You can either start investing in a stocks and shares ISA by drip-feeding your money in bit by bit, or by putting a lump sum in.

What are the stocks and shares ISA rules?

There are some rules you should be aware of before opening a stocks and shares ISA:

• You have to be 18 or over and a UK resident to open one
• You is it worth investing in stocks and shares isa now an allowance of £20, each tax year
• The allowance can’t be carried forward to the next tax year, so use it or lose it
• You can only pay into one of each type of ISA during any given tax year (we explain more here). This means that you won&#;t be able to contribute into two stocks and shares ISAs

To find out more about the rules that govern ISAs, check out our Guide to ISAs here.

What are the benefits of a stocks and shares ISA?

The big advantage of any ISA is that they shelter your money from tax:

• No income tax to pay on any profits you make
• You don&#;t have to worry about paying dividend tax
• Profits are free from capital gains tax
• You don&#;t have to declare profits on your tax return, saving you time. Learn more about the tax benefits of ISAs here.

Without the ISA wrapper, you can only earn £2, a year in dividends tax free. Above this and you’ll have to fork out between is it worth investing in stocks and shares isa now and %, depending on how much you earn and your individual circumstances.

The only tax that you may have to pay is stamp duty charged at % when you buy shares worth more than £10, Find out more about how shares are taxed here.

Your investments will also be safe if the government decides to cut the tax-free allowances for capital gains, dividends or interest.

Check out this page on self-invested stocks and shares ISAs to see which providers are highly rated by us.

How are investments that are not inside an ISA taxed?

Any investments that are held outside an ISA may be liable for income tax, capital gains tax or dividend tax.

Here are the thresholds for the tax year:

• Capital gains tax: No capital gains tax to pay on the sale of assets such as shares or an investment property up to a profit of £12,
• Dividend tax: You can earn up to £2, tax free from dividends
• Income tax: Basic-rate taxpayers can earn up to £1, in interest payments before having to pay income tax, is it worth investing in stocks and shares isa now. Higher-rate taxpayer you can earn £, no allowance for additional rate taxpayers.

Here&#;s an example of how an ISA shelters you from tax:

Let’s say you are a higher-rate taxpayer with £80, in your stocks and shares ISA:

• £65, is invested in individual companies’ shares and stock market funds = dividend payments of % a year
• £15, is in corporate bonds = % a year
• Annual income = £2,

Justin Modray, of the financial adviser Candid Financial Advice, explains:

• Initially you save £ a year on dividend and income tax
• If your portfolio grows by say 5% a year, in 10 years it’s worth just over £,
• Over the 10 years you&#;d have saved £4, in tax
• Sell your wide range of investments again and you&#;d make a gain of £50,
• Due to the ISA wrapper, you save £7, in capital gains tax
• Your total tax savings = £11,

Find out more about how to invest a large lumpsum such as £50, here. If you decide you want to open a stocks and shares ISA, Fidelity is one of the best for ready-made portfolios as we explain here.

Which ISA is right for me?

ISAs work best when you pick the right one for your savings goal. Take this short survey to find out which ISA is right for you.

• It only takes a couple of minutes
• No personal details required

Will I make money with a stocks and shares ISA?

There are no guarantees that you will make money by investing in a stocks and shares ISA.

With that said, if you invest in a diverse range of investments and remain invested for a number of years, is it worth investing in stocks and shares isa now, there is a high probability that you will have made money on at least some of those assets.

If your investments are successful, you should easily be able to earn more than you would through a savings account.

Can I lose all my money?

Yes because your savings are at risk. But you only really make a loss if you sell your investment for less than you bought it for.

Here are some tips:

• Invest in an ISA for the long term: If you don’t sell, the loss hasn’t been “crystallised”, is it worth investing in stocks and shares isa now. If you leave your lump sum invested, your investment account might start to increase, so don’t panic if things go south over a short timeframe.

• Spread your risk: By investing across lots of different asset classes. You also reduce the risk of losing all your money because when one investment moves down, another is likely to be moving up.

Find out more about the basics of investing in our beginner’s guide to investing.

Can you have multiple stocks and shares ISAs?

Yes, you can open a new stocks and shares ISA with a different provider every year if you wish, is it worth investing in stocks and shares isa now. But you can only pay into one stocks and shares ISA during each tax year.

So for example:

• If you opened a stocks and shares ISA in a previous tax year, is it worth investing in stocks and shares isa now, you could open another stocks and shares ISA in the current tax year.
• But you are only allowed to contribute into one of them in any one tax year, so you would have to choose between them. If you transfer money between ISAs, is it worth investing in stocks and shares isa now, this doesn&#;t count as a contribution.

The same applies to other types of ISA too: so you can only open one of the same type in any one tax year. And you can only only contribute into one of the same type of ISA in a single financial year.

Find out more in our guide to ISAs.

What’s the best way to transfer a stocks and shares ISA?

ISA transfers are really simple, just contact the new provider and fill out an ISA transfer form. The provider will do the rest.

Transfers should take no longer than:

• 15 working days for cash ISAs
• Or 30 calendar days for a stocks and shares ISAs

When you transfer a stocks and shares ISA you have two options:

• “In-specie” transfer &#; Opt to leave your investments untouched as long as the new provider offers access to the funds and shares you own, meaning you don’t miss out on any investment gains during the switching process
• Sell your investments and move the cash across &#; This means you will have to select investments through your new provider

If you’re unfamiliar with them, individual savings accounts, or ISAs, can sound complicated.

It doesn’t help that they come in several different guises. But all you need to remember is that ISAs are a form of financial wrapper offering a tax-free way to save and invest.

This is a good thing to do, is it worth investing in stocks and shares isa now. The less tax you’re legally obliged to pay on your savings and investments, the more money you get to keep. 

Annual ISA allowance

Every adult in the UK has an ISA allowance, standing at £20, for the current /22 tax year. 

Put another way, this is the maximum amount you’re allowed to save into your ISA is it worth investing in stocks and shares isa now for the tax year that began on 6 April  

It’s OK to spread your allowance among different types of ISA up to the £20, limit. But what you can’t do is carry over any unused amounts of ISA allowance to another year. Essentially, it’s a case of “use it or lose it” during the month period concerned. 

While many savers prefer the security of keeping their money in a so-called ‘cash ISA’ (effectively a tax-free savings account), others are happy to allocate some or all of their annual allowance to invest in the stock market via a product known as a stocks and shares ISA.

Here’s how stocks and shares ISAs work&#;

Before going any further, it’s essential to point out that investing in the stock market is not for everyone. Stock market-based investments come with no guarantees and it’s possible to lose money choosing this route. 

You might get back less than you put in, and you could lose everything.

That said, over the long term &#; and by this we mean at least five years, but preferably longer &#; it’s possible for stock market investments to produce far superior returns to those available from, say, ultra-safe, low interest-paying deposit accounts &#; especially when inflation is factored in.

With inflation far outstripping the Bank of England’s base rate currently, turning to the stock market is one of the few ways investors are potentially able to produce a real return on their money over time. 

What is a stocks and shares ISA?

A stocks and shares ISA is a tax-efficient account that acts as a wrapper for your investments. It allows you to gain exposure to the stock market in a variety of ways. 

These include investing directly in company shares (such as those found on the FTSEthe UK’s main stock market index featuring its largest businesses) and in a range of managed funds.

These funds, including unit trusts and investment trusts, are pooled arrangements run by professional managers. They offer investors exposure to a variety of assets such as shares, government and corporate bonds and property.

It’s also possible to use a stocks and shares ISA to invest in more eclectic assets such as fine wines and land, is it worth investing in stocks and shares isa now. But the majority of investors stick to shares and bonds.

You can only open one stocks and shares ISA each year. If you end up with several on the go at once, you can only pay into one of these during any tax year.

What are the benefits of a stocks and shares ISA?

A stocks and shares ISA shelters any returns your investments make from three key areas of tax: income tax, dividend tax and capital gains tax.

Income tax

Income tax doesn’t just apply to your take-home salary. It’s a tax that’s also levied on the interest produced by certain types of investments, including bonds and some funds. 

However, any interest from interest-bearing investments like these held within a stocks and shares ISA is not liable to income tax.

Dividend tax

Share dividends are income payments made to investors based on the profits a company earns. 

Not all companies pay dividends but, where they do, as an investor you’re given an allowance of £2, for the /22 tax year before paying tax is it worth investing in stocks and shares isa now them.

Once that limit has been exceeded, the rate is then applied at % for basic rate taxpayers, and % and % for higher and additional-rate taxpayers, respectively. 

However, when investments are held in stocks and shares ISAs you avoid the need to pay tax on dividends altogether. 

Capital gains tax

You’re obliged to pay Capital Gains Tax (CGT) when you make a gain from selling assets such as shares, a second property (it doesn’t apply on your main home), and other items such as jewellery.

Everyone has an annual CGT allowance which, for the /22 tax year ending in April, stands at £12, If you hold investments such as shares outside an ISA, you’ll pay tax on any gains you make above this threshold (at a rate of 10% for basic rate taxpayers and 20% for higher and additional-rate taxpayers).

However, any gains made by investments held within a stocks and shares ISA are not subject to CGT.

Finally, another benefit of stocks and shares ISAs is that, should you need to fill in a tax return, there is no need to declare profits on it. In fact, you don’t need to mention the fact that you have any ISAs.

How do I open a stocks and shares ISA?

Stocks and shares ISAs are available directly from financial services companies including banks, financial advisers, stockbrokers and investment management firms. 

An alternative way of opening a stocks and shares ISA is by using an online investment platform or fund supermarket. 

In recent years, this option has become the dominant way for so-called retail investors &#; in other words, the likes of you and me &#; to do so. 

How do I choose a platform?

The investment platform space is a competitive one with dozens of providers offering access to stocks and shares ISAs. Big-name firms include Hargreaves Is it worth investing in stocks and shares isa now, Interactive Investor, Vanguard, Halifax and AJ Bell.

Providers offer a range of services from basic options to more expensive premium-range choices. 

Finding the best stocks and shares ISA provider for you depends on a number of factors, including your familiarity with investing, how you want to invest and the sort of service that you’re looking for.

For example, experienced investors may be happy with a basic service that just allows them to buy and is it worth investing in stocks and shares isa now investments and view their account online. 

But, if you’re new to investing, you may be on the hunt for as much information and as many tools as possible to help with your investment decisions. 

Aimed at inexperienced investors, several providers have created ready-made portfolios featuring a range of relevant investments based on your particular attitude to risk.

What does it cost?

Whether you’re an old hand or a rookie investor, it always costs money to invest, and it’s worth remembering that fees will be applied to your stocks and shares ISA regardless of how your investments perform.

Charges are levied for a variety of transactions and will depend on the make-up of your particular portfolio &#;  in other words, the range of shares and funds you hold &#; and also your trading style (frequent, how to invest index funds canada, etc).

Platform charges

Almost all providers will charge investors some kind of platform or servicing fee. This might be a flat fee applied monthly. Or it might be an amount that’s calculated annually (and capped at a maximum figure) based on a percentage of the money you hold on the service.

Flat fees are preferable if you’re planning on investing a lot of money as they represent better value compared with the same charge that’s applied to a smaller sum held within your ISA. Percentage-based charges are attractive to start with, but become increasingly costly the more that gets invested. 

Management fees and dealing costs 

On top of platform costs, funds held within your stocks and share ISA will also incur an annual management fee from the provider offering the fund itself &#; an investment management firm, for example. This typically ranges between % and 1% of the relevant holding. 

Platforms are also likely to apply a dealing charge every time you buy or sell a share holding or fund that’s held within your ISA. Most platforms will charge either a fixed fee per trade (which itself may alter depending on the frequency of your trades), or it will be calculated as a percentage of the investment you’re making. 

If you’re planning on carrying out a lot of share trading, look for platforms that allow a certain number of free trades per month. Some trading apps &#; basically a version of a platform that you can run from your smartphone or tablet &#; offer the option of commission-free trades on stocks.

The latter make their money in other ways, such as charging currency conversion fees for trades made on companies based on overseas stock exchanges.

Transfer fees are another consideration, is it worth investing in stocks and shares isa now. Most providers are happy to transfer investments into your account for free, but will charge customers where they decide to move their holdings to a rival provider.

If you prefer to execute your trades over the phone rather than online, check if there’s a charge for this before committing to a particular provider.

Bear in mind also that inactivity fees may apply where investors let their investment account lie dormant for long periods at a time. If that sounds like your potential trading style, check before signing up.

Other considerations

Keeping a lid on charges is an important consideration for all investors. But there are other aspects to watch out for as well, including customer service (ideally phone-based and available 24/7), ease of access to your account and consumer protection.

When it comes to the latter, check that your stocks and shares ISA provider is covered by the Financial Services Compensation Scheme (FSCS). 

If your provider should go to the wall, it means that up to £85, of your investments will be protected. This doesn’t mean that any losses arising from poor investment decisions relating to your ISA are covered, just any that arise from the company that’s overseeing your investments going out of business.

You might be dedicated to using up your annual ISA allowance, which stands at £20, is it worth investing in stocks and shares isa now, in the /22 tax year. But given the impact of the Covid pandemic on businesses and the economy, is it wise to invest your ISA allowance in the stock market?

Interest rates on cash are at a record low after the Bank of England cut the base rate to just %. Meanwhile, shares have the potential for greater returns over the long term once the market makes a full recovery from the crisis.

Here are some factors to consider before putting your money in an Investment ISA in the current climate.

Your timeframe

You might want to focus on building up your cash reserves to boost your safety net. But if you don’t plan to access your money for many years, and so have a long investment timeframe, now could be a good time to invest. A financial adviser can help to ensure you have the right split between cash and shares for your personal situation and financial goals.

Stock market ebbs and flows are all part of investing, and the market has demonstrated that over time, no matter what crises are endured, it has recovered and often gone on to reach fresh highs.

Use it or lose it

Bear in mind that you can often move money into your ISA account and hold this in cash until you are ready to invest. That’s if you aren’t comfortable with diving into the market just yet. This way, you ensure you use your ISA allowance, which can’t be carried over into the next tax year.

Access to cash

Ideally, you want enough cash set aside for six to nine months’ worth of living expenses, whatever your stage of life. This will help you pay for unexpected emergencies, such as home repairs or a period of unemployment, is it worth investing in stocks and shares isa now. The right amount of cash depends on how much you need to feel financially secure and your personal situation. A financial is it worth investing in stocks and shares isa now can help you with this by carrying out a cashflow analysis. You should only invest if you are comfortable with the risk that you could lose as well as gain money. However, is it worth investing in stocks and shares isa now, the longer you invest, the less likely it is that your return will be impacted by stock market gyrations.

Set fear aside

When you’re investing, it’s important to focus on your longer-term goals.

Bear in mind that if you have many years to go before you’ll need the money, you could benefit from major gains during some of the stock market’s most volatile periods. When the market falls, you could pick up shares at a cheaper price, and benefit from their potential recovery.

You can drip feed your savings

The market might endure volatility for some time. No-one can know when markets will fully bounce back, and you may feel more comfortable drip-feeding your money into an Investment ISA over the tax year. Regular contributions to the stock market benefit from compounding, where you earn returns on your returns.

Gradually putting money into the market over several months will mean you buy more shares when the market falls, and fewer when it rises. This may help to smooth volatility over the long term.

Ensure you are diversified

Consider where your money is already invested, is it worth investing in stocks and shares isa now. Your money should ideally be spread across a variety of companies, sectors, and geographical locations. One way to ensure this without having to do the hard work yourself is by investing in a ready-made ISA portfolio. Plenty of wealth managers such as Brewin Dolphin offer Investment ISA portfolios that are already diversified.

It’s generally considered wise to make use of your ISA allowance every year, if you can afford to do so. Investing in an ISA is a flexible and tax-efficient way to benefit from stock market growth. An adviser can help you boost your returns over time by providing tailored options suited to your personal circumstances.

The value of investments, and any income from them, can fall and how to post links and make money may get back less than you invested. Neither simulated nor actual past performance are reliable indicators of future performance. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Opinions expressed in this publication are not necessarily the views held throughout Brewin Dolphin Ltd.