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What's a stocks & shares ISA?

A stocks & shares ISA is a tax-efficient investment account.

This means you don’t have to pay UK income tax or capital gains tax on money you earn from your investments made through the ISA.

ISA stands for Individual Savings Account. If you want to invest in shares, funds, investment trusts or bonds, you can generally do so using a stocks & shares ISA – sometimes referred to as an investment ISA. It’s important to understand that the value of investments can fall as well as rise and you may not get back what you invest.

We explain how a stocks & shares ISA works and what to consider.

How does a stocks & shares ISA work?

You don’t need to be on Wall Street to invest your money. You can start investing from your kitchen while having a cup of tea. 

You can open a stocks & shares ISA if:

  • You’re aged 18 or over
  • You haven’t already subscribed to another HSBC or first direct stocks & shares ISA for the current tax year
  • You’ve not exceeded your £20,000 ISA limit for the current tax year

You must also be either:

  • A UK resident for tax purposes
  • A crown servant working outside the UK or their spouse or civil partner

To open a stocks & shares ISA with us, you'll first need to have an HSBC current account. You'll also need to meet the eligibility criteria for the investment you'd like to apply for. Fees will apply.

Before you invest your money, it's important to spend some time learning the basics and understanding the risks. Our learn to invest page is a great place to start.

A stocks & shares ISA should be seen as a medium to long-term commitment. That means you should be prepared to invest for at least 5 years. The value of any investment can fall, as well as rise, so there's always a risk that you may get back less than what you invest.

What can you invest in?

If you decide to invest, you can either:

  • Invest in funds
  • Research and buy your own shares

Invest in funds

An easy way to start investing is to buy units in ready-made baskets of investments. Funds allow you to spread your money – and risk – across different investments including shares, trusts and bonds. 

Explore the available funds or choose a ready-made portfolio.

Research and buy your own shares

If you’re keen to take an active interest in investing, you might prefer to research and buy your own shares. When you buy a share, you're buying a small stake in a company. It can feel good to watch a business you believe in do well – but remember that companies can also do badly. The value of your investment could fall.

How much can you pay into an ISA?

The total amount you can save in ISAs in the 2024/2025 tax year is £20,000. This is known as your annual ISA allowance. The government sets this limit and can change it from one financial year to another.

You can invest all your allowance in a stocks & shares ISA or spread it across multiple stocks & shares ISAs with other providers, or other types of ISA such as a cash ISA. But you can only subscribe to one HSBC or first direct ISA of each type per tax year, and you must stay within the total limit of £20,000 across all ISAs.

If you have a Lifetime ISA, you can only put in up to £4,000 each tax year until you’re 50. The Lifetime ISA limit of £4,000 counts towards your annual ISA limit. 

The tax year runs from 6 April to 5 April. The HMRC deadline to put money in an ISA and take advantage of your allowance for each tax year is midnight on 5 April. However, it's worth checking with your provider as they may have an earlier deadline. 

Keep in mind – the value of tax benefits will depend on your individual circumstances and tax rules can change in the future.

What happens to any income from a stocks & shares ISA?

Here’s what you may be able to do with any income made on investments in a stocks & shares ISA:

  • Receive income payments
  • Have it reinvested back into the investment it’s come from to help accumulate more growth
  • Hold it as cash in your ISA – which you can use to buy a different type of investment within the same ISA

There are some investment types – such as accumulation funds – that will only allow you to reinvest. This means the value of any income received will stay within the investment until the time you come to sell.

Before choosing your investments, it’s important to understand whether you’re investing for income or growth.

How much does it cost to invest in a stocks & shares ISA?

If you’re thinking about investing in a stocks & shares ISA, there are fees and charges to be aware of. These include:

Account fee / platform fee

You may be charged for using a single online account – also known as an investment platform – that holds your investments together in one place. This can be a flat fee, or a percentage of the value of the investments you have in the account.

Fund management charge

When you invest in funds, the fund managers will charge you for actively looking after your investments – also known as an annual management fee.

Buying and selling charges

With share dealing, it’s common to pay either a percentage or a flat fee every time you buy and sell shares on a platform. This is also known as a trading fee. There may also be taxes such as stamp duty reserve tax in the UK or the foreign equivalent. This depends on the nature of the investment.

Transfer out fee

Some providers charge a fee if you move your stocks & shares ISA to another provider.

Are you ready to invest?

Now might be the ideal time to invest for some people, but not for others. This will depend on your circumstances. 

Before you start investing, it’s recommended that you:

At HSBC, you can start investing with a lump sum of £50. You can also set up regular monthly investments from £50 too. Fees and eligibility criteria apply. As with all investments, there's a risk you might not get back what you invest. But you can choose the level of risk you feel comfortable with. 

Explore: Is investing money worth the risk?

Can you access your money if you need to?

Although a stocks & shares ISA should be seen as a medium to long-term investment, your situation could change.

If you need to withdraw money from your ISA, you can do this at any time. For example, at HSBC, you can access your money if you need to – usually within 4 business days – with no exit fees. 

Key takeaways

  1. A stocks & shares ISA gives you the potential to earn more on your savings than a cash ISA, but the value of investments can go down as well as up and you could get back less than you invest.
  2. A stocks & shares ISA should be seen as a medium to long-term investment, which means you should be prepared to invest for at least 5 years.
  3. Before you open a stocks & shares ISA, it’s a good idea to build up an emergency savings fund to avoid the need to dip into your investments.

Guide to investment goals

Discover how to create, track, and manage your investment goals in the latest version of the app. Eligibility criteria & fees apply.