What are the rules when it comes to stocks and shares s?
To be eligible for a stocks & shares ISA, you need to be aged 18 or over and resident in the UK.
The only real exception to the residence requirement is that Crown servants based overseas, and their spouses and civil partners are also eligible. ‘Crown servants’ are members of the UK armed forces and the diplomatic service who are currently posted overseas.
Permitted ISA Contributions
You can only contribute to one stocks & shares ISA in any one tax year, so you can’t split your contributions between different ISA providers. The tax year runs from 6th April in one year to 5th April in the next year.
You can contribute £20,000 to ISAs in any one tax year. If you wish, you can put the entire £20,000 into your stocks & shares ISA. However, if you choose to contribute to any other form of ISA – such as cash, lifetime, help to buy or innovative finance – during the same tax year, then anything you contribute will reduce the amount you can contribute to the stocks & shares ISA.
For example, if you contribute a total of £10,000 to other types of ISA during the tax year, you will only be able to put £10,000 in stocks & shares.
If the amount you contribute to other ISAs adds up to £20,000, then you won’t be able to contribute anything to a stocks & shares ISA.
You can choose to make one single ISA contribution during the tax year, or a series of lump sum contributions, or a regular monthly contribution, or a combination of these. It doesn’t matter what you contribute and when during the year as long as you don’t exceed the overall £20,000 limit.
You can’t ‘carry over’ any unused allowance to the next tax year, so if you haven’t contributed the full £20,000 by the time 5th April comes around, unfortunately that means you’ve lost that part of your tax-efficient savings allowance forever.
Many stocks & shares ISA providers will allow you to transfer the balance from other ISAs. You can do this without affecting your annual allowance.
So, for example if you transferred £10,000 from a cash ISA into a stocks & shares ISA and £10,000 from one stocks & shares ISA to another, these transactions would not prevent you making a new contribution of £20,000 during any one tax year.
Click here for more info on your ISA transfer options
You can cash in your stocks & shares ISA, or withdraw a portion of your funds, at any time, but you should always view a stock market-based investment as a medium to long-term commitment, where the value of the holding can fall as well as rise.
Once the funds have been withdrawn, they lose their tax efficient status and you can’t ‘replace’ the withdrawn funds during the same tax year – so if you contributed £20,000 and then withdrew £2,000, you couldn’t then make a replacement contribution of £2,000 prior to 5th April.
Stocks & shares ISAs when you die
You can choose to leave your stocks & shares ISA to a beneficiary of your choice via your will.
Regardless of who you might nominate as the beneficiary of any existing ISA, your spouse or civil partner, if you have one, will inherit an Additional Permitted Subscription.
This additional subscription, on top of their usual £20,000 ISA allowance, will be equal to the higher of the value of the ISA on the day of your death and the value when the account is closed following administration of your estate.
Your ISA will be subject to inheritance tax. The account remains open until the administration of the estate is complete or the account is closed by the executor.