The short version
- A stocks and shares ISA is a tax-free account for investments such as ETFs, funds and shares.
- In the 2026/27 tax year you can pay in up to £20,000 across all your ISAs. You pay no tax on the income or gains, and don't need to declare them.
- To switch provider, transfer the ISA. Taking the money out and paying it in elsewhere uses up allowance you can't get back.
- Its value can fall. The FSCS can pay up to £85,000 if a failed firm loses your investments, but nothing covers market falls.
Part of Getting started. For the whole process in order, see how to buy your first ETF, step by step.
- £20,000most you can pay into ISAs in the 2026/27 tax year
- 30 dayslongest a stocks and shares ISA transfer should take
- £85,000FSCS cover per person, per firm, if a firm fails and investments are missing
What a stocks and shares ISA is
An ISA (individual savings account) is a tax wrapper: an account that shelters what’s inside it from tax. GOV.UK lists four types: cash ISAs, stocks and shares ISAs, innovative finance ISAs and Lifetime ISAs.
A stocks and shares ISA is the one for investments. The account itself is just the box. You choose what goes in it, such as an ETF, and its value rises and falls with what you hold.
The 2026/27 allowance
In the 2026/27 tax year, which runs from 6 April 2026 to 5 April 2027, you can save up to £20,000 in ISAs. That’s a total across all your ISAs, not £20,000 each.
It’s use it or lose it. If you pay in less than the limit, you can’t carry the difference forward to the next year. Your ISA doesn’t close when the tax year ends, though, so what’s already in it stays sheltered.
How it's taxed
You pay no tax on income or capital gains from investments in an ISA. If you fill in a tax return, you don’t need to declare them.
Outside an ISA, the same investments can be taxed. In 2026/27, dividends above a £500 allowance are taxed at 10.75% for basic-rate taxpayers, 35.75% for higher-rate and 39.35% for additional-rate. Gains above the £3,000 annual exempt amount face Capital Gains Tax at 18% or 24%.
Those allowances are small, so the shelter matters more as your money grows. Investing outside an ISA covers the detail.
Who can open one
You must be 18 or over and resident in the UK. Members of the armed forces and Crown servants posted abroad, such as diplomats, and their spouses or civil partners, can open one too.
Children can’t have an adult ISA. A parent or guardian can open a Junior ISA for a child under 18 instead, with a limit of £9,000 for 2026/27. ETFs in a Lifetime ISA or Junior ISA covers both.
Paying into more than one ISA
You can split your £20,000 between several ISAs in the same year. Since 6 April 2024 that includes more than one ISA of the same type. You could pay into two stocks and shares ISAs with different providers, for example.
GOV.UK’s own example is £10,000 in one cash ISA, £3,000 in another and £7,000 in a stocks and shares ISA. The exception is the Lifetime ISA: you can pay into only one each year, and no more than £4,000.
Flexible ISAs
Normally, money you take out of an ISA still counts towards that year’s allowance. A flexible ISA lets you take cash out and put it back in the same tax year without using up more allowance.
GOV.UK gives this example. You pay £10,000 into an ISA in 2026/27, then take out £3,000. With a flexible ISA, you could pay in another £13,000 that year. Without one, you could pay in only £10,000.
Not every ISA is flexible, and your provider can tell you whether yours is. The money has to go back in before the tax year ends.
Transfers: move it, don't withdraw it
You can transfer an ISA to another provider at any time, in full or in part. That includes money paid in this year and in earlier years, and you can move to a different type of ISA.
The rule that matters: let the new provider arrange it. You fill in its transfer form, and it collects the money or investments from your old provider. If you withdraw the money yourself instead, you can’t reinvest that part of your tax-free allowance.
A transfer between stocks and shares ISAs should take no longer than 30 calendar days. FCA rules aim to let you switch platforms without selling your investments, but ask whether your ETFs will move as they are or be sold and sent as cash.
What you can hold
GOV.UK lists what a stocks and shares ISA can hold: shares in companies, unit trusts and investment funds, corporate bonds, government bonds and long-term asset funds.
ETFs are funds. HMRC’s rules for ISA managers treat UK UCITS funds and recognised overseas UCITS funds as qualifying investments, which covers the UCITS ETFs sold to UK investors.
- Fractions are allowed. Since 5 November 2024, a stocks and shares ISA can hold part of a share, if your provider offers it.
- Crypto notes aren’t. Cryptoasset exchange traded notes can’t be held in a stocks and shares ISA unless they were already there before 6 April 2026.
- Existing holdings can’t move in. Shares you already own outside an ISA can’t be put straight into one, unless they come from an employee share scheme.
Charges to watch
Platforms describe the same charge in many ways. The FCA once counted at least 11 different names for what is essentially a platform fee, including “account charge” and “custody charge”.
- Platform or account fee: a yearly percentage of your pot, a flat fee, or a percentage with a cap.
- Dealing charges: a fee each time you buy or sell.
- The fund’s ongoing charge: taken from inside the ETF.
- The spread: the gap between the price you buy at and the price you could sell at.
- Transfer-out or closure fees: worth checking before you join, not when you want to leave.
The differences are real. The same FCA study found that charges on £5,000 in a stocks and shares ISA ranged from 0.2% to 2.4% a year. What does an ETF really cost? and the fee calculator show why that matters over decades.
What the FSCS covers
If your ISA provider fails and your investments or money are missing, the FSCS can pay up to £85,000 per person, per firm. That applies to firms that failed after 1 April 2019.
It doesn’t cover poor investment performance. If your ETF falls because markets fall, there’s no claim. The firm must also be authorised by the FCA or PRA, and the service it gives you must be regulated. Do I need a broker? shows how to check, and Are ETFs safe? covers what happens if a fund provider fails.
What changes in April 2027
From 6 April 2027, under-65s will be able to put only £12,000 a year into cash ISAs. The total allowance stays at £20,000. HMRC’s rules also change three things for stocks and shares ISAs:
- Cash inside is charged. Interest on cash held in a stocks and shares ISA will face a 22% charge, which your provider pays to HMRC. This applies at any age.
- Money market funds are capped. You can hold them, but your ISA can’t be made up entirely of them.
- No transfers back to cash. If you’re under 65, you won’t be able to transfer from a stocks and shares ISA to a cash ISA. Moving the other way is still allowed.
Only money market funds count as “cash-like”, so ETFs that hold shares or bonds aren’t caught. Cash ISA vs stocks and shares ISA explains the changes in full.
Common questions
- Can I have more than one stocks and shares ISA?
- Yes. Since April 2024 you can pay into several in the same tax year, as long as the total across all your ISAs stays within £20,000.
- Do I have to invest the money straight away?
- No, you can hold cash while you decide. Interest on it is tax-free until 5 April 2027. From 6 April 2027, it faces a 22% charge.
- Can I lose money in a stocks and shares ISA?
- Yes. The ISA protects you from tax, not from falling markets.
- Do I need to tell HMRC about my ISA?
- No. You don’t need to declare ISA income or gains on a tax return.
This page explains how stocks and shares ISAs work. It isn't advice about what you should do. Investments can fall as well as rise, and you may get back less than you put in. For free, impartial guidance, try MoneyHelper. Read the full disclaimer.
Sources
- Individual Savings Accounts (ISAs), GOV.UK
- How ISAs work, GOV.UK
- Withdrawing your money, GOV.UK
- Transferring your ISA, GOV.UK
- How to manage ISA subscriptions, HMRC, GOV.UK
- Stocks and shares ISA investments for ISA managers, HMRC, GOV.UK
- The Individual Savings Account (Amendment) Regulations 2024 and explanatory note, legislation.gov.uk
- Individual Savings Account and Child Trust Funds (Amendment No. 2) Regulations 2024, HMRC, GOV.UK
- Junior Individual Savings Accounts, GOV.UK
- Tax on dividends, GOV.UK
- Capital Gains Tax: rates and annual tax-free allowances, HMRC, GOV.UK
- ISA reform 2027: anti-circumvention rules factsheet, HMRC, 23 June 2026
- Investments, Financial Services Compensation Scheme
- Investment Platforms Market Study: Final Report (MS17/1.3), FCA, March 2019
- MS17/1: Investment platforms market study, FCA, updated May 2022
Facts checked 13 October 2026.