A Stocks and Shares ISA is a flexible, tax-efficient account for your investments that comes with a range of tax benefits. Any gains are exempt from UK Capital Gains Tax. You don't pay UK tax on any income you receive from your ISA. And, you don't need to declare any of this on your tax return.
Let’s weigh up the pros and cons of a Stocks and Shares ISA.
A Stocks and Shares ISA allows you to save your yearly allowance in a wide range of investments including funds, shares and bonds as well as cash. This means you can choose whether you want to hold cash or investments - or a mix of the two.
With a Stocks and Shares ISA, it's possible to choose investments with potentially more growth potential. But remember, the value of stocks and shares can go down as well as up, so you may not get back what you invest.
With a Cash ISA your money typically sits in a deposit account, which means it’s low risk. Yet with low interest rates and the effect of inflation, the value of your money may still erode over time.
Is there a limit to how much you can invest in an ISA? There is. And it's called an ISA allowance. It's a yearly limit, which has historically increased. Good news for investors.
As for the age limits for Cash ISAs and Stocks and Shares ISAs, you can take a look at those here. If you're under 18, it's possible to have a Junior ISA. There's more about that in our ‘What is a Junior ISA?’ video.
And finally, how many ISAs can you have?
With each tax year and new ISA allowance, you can open a new ISA. This can be with a provider you've used before, or a new one. Over a few years it means you could have lots of ISAs and lots of different providers. Some people find it simpler to have one provider - making it easier to manage and track their investments.
If you have a number of ISAs in different places, it's always possible to transfer them to a single provider further down the line. If that works for you.
So, there you have it. If you think a Stocks and Shares ISA might be right for you, then you can find out more on our website.
Thanks for watching.