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Adult stocks and shares ISAs are way more popular than most other types of ISAs, other than innovative finance ISAs. For a reason.

Many people think ISAs are complex, and this viewpoint isn’t helped by the web of options available

ISA

But this type of savings and investments account simply works to grow your money in a hands-off way that stays tax-free.

In this guide, we cover the top stocks and shares ISAs today.

Table of Contents:

Let’s have a share of the pie then... ๐Ÿฅง


Best Stocks and Shares ISAs for Beginners in 2022:

Considering a stocks and shares ISA account? When crunching your Trading Data, take time to know your strategy and use good financial common sense.


Service ProviderRating
1. Vanguardโ˜…โ˜…โ˜…โ˜…โ˜…Click Here
2. eToroโ˜…โ˜…โ˜…โ˜…โ˜…Click Here
3. FinecoBankโ˜…โ˜…โ˜…โ˜…โ˜…Click Here
4. Hargreaves Lansdownโ˜…โ˜…โ˜…โ˜…โ˜…Click Here
5. Halifaxโ˜…โ˜…โ˜…โ˜…โ˜…Click Here


โญ 1. Vanguard Review โ€“ Best Stocks and Shares ISA for ETF Investing

In my best index funds guide, I described Vanguard's renowned record for achieving annual returns year after year since before the turn of the millennia up to now (they’ve even ramped up in their size of returns, in recent years).

Check out that article for more.

Vanguard is therefore truly the first step a new investor with significant savings should consider, if they are drawn to the financial markets. There is no prerequisite technical knowledge required, nor do you need to devote time to research - this provider is an expert at allocating your funds into strategic indexes and ETFs.

Which means, Vanguard will trade shares for you. And if this pathway to financial investment seems interesting, it’s well-worth considering the Vanguard stocks and shares ISA.

A lonely trustworthy ship of the night, his provider is one of the most credible and popular investment providers on the international fund stage, allowing you to invest directly without going through your employer. 75 funds are available, each of which is actively managed by the Vanguard team. This specific stocks and shares ISA is one of their most cost-effective products.

You’ll only need to pay 0.15% yearly in account costs. And individual trades made by Vanguard on your behalf are not subjected to trading fees as with the bulk of alternative providers. As for minimum deposits, this range is between a lump sum of £500 or higher, or a monthly subscription of £100.

In order, these conditions rank Vanguard as one of the most budget-friendly services for long-position investment. Despite the actual range of offered individual shares being limited, Vanguard has a strong performance rap sheet.

So if you’re seeking investments in a stocks and shares ISA, but do not have prerequisite knowledge of choosing between the different stocks, it’s strongly recommended that you consider Vanguard. For readers who don’t know, Vanguard is among the UK’s most popular index fund providers too. So if you want to focus on stocks, bonds, or both - Vanguard provides tons of different portfolios.

Overall, this grants a fully passive route into the financial stock markets, because your specific holdings are managed by Vanguard’s team of experts. This bleeding-edge fund service provider only recently entered the UK stocks and shares ISA stage, so you can grow wealth inherent tax reliefs. Which makes the associated investment fees worthwhile.

Vanguard Opening Account

As stated, Vanguard requires only 0.15% in fees yearly, to manage your portfolio. Which is far lower than the majority of stocks and shares of ISA companies on this UK scene. So as long as you meet the minimum deposit requirements for investment as laid out by Vanguard - ie. £500 upfront or a direct debit of £100 per month - then you’re good to go.

PROS

  • Renowned index fund provider
  • Proven returns year after year, and accelerating
  • Recommended by Ray Dalio
  • Over 75 funds on offer
  • Annual fee of only 0.15% for management

CONS

  • ยฃ500 deposit minimum or ยฃ100 per month

2. eToro โ€“ Best for Copy-Traded, Aggressive Portfolios

eToro doesn’t actually provide a stocks and shares ISA account.

But this platform nevertheless suits investors who want a slightly more aggressive alternative for their surplus capital.

eToro doesn’t charge any commissions on a per-trade basis (note that Vanguard also doesn’t) - but as I’ve written more than once, in economics there’s no such thing as a free lunch. So any “0% commission” offering will certainly mean more active management time spent, on your side of the fence, or fees made up for in some other way, somewhere down the line.

The main reason to consider this option is that eToro as you take a slightly more hands-on approach to creating a savings and investments account that could mirror an ISA. You’re essentially giving up some of the trading expertise-resource powering your portfolio (by copy-trading successful traders on the eToro platform, who have proven track records, but not as deep as someone like Vanguard), in order to potentially gain higher returns over a medium-to-long period of time in the future.

So all in all, this suits investors with greater risk appetite and shorter time horizons. And anything invested that is less than £12,300 annually falls under the capital gains tax allowance.

As for security, they are fully licensed by the FCA, with lots of flexibility in payment options - allowing funding using e-wallets rather than just bank cards or bank transfers.

PROS

  • Invest in stocks with 0% commission
  • Avoid stamp duty for UK-listed shares
  • Fund using e-wallets as well as other types
  • Take more risk

CONS

  • Much higher downside risk compared to a top-performing ISA

3. FinecoBank Review โ€“ Lower Account Minimums

FinecoBank is one of the best stocks and shares ISAs—although it doesn’t climb to the same standards as Vanguard.

For instance, compared to Vanguard 0.15% annual account management fee, Fineco Bank charges not far from the worst, at 0.25% (based on the value of your portfolio).

But the advantages include the fact that FinecoBank doesn’t charge an exit fee if you want to transfer your fund account with them to a different ISA in the future. Fineco exposes you to thousands of differing shares and ETFs, with your option to custom-tailor your portfolio.

However only trading in ETFs is free. Doing share dealing costs just under £3.00 per trade for UK shares and just over this for US shares, which overall makes this a less budget-friendly option than Vanguard, at least on the front-end of things. But opening an account requires less than half as much capital as Vanguard, at a minimum account deposit of £100. 

The mobile app is well-designed, letting you get a viewport of your balances, or even make adjustments to its selections, with interesting features such as its global fund screener which is designed to snoop out investment opportunities.

Overall, we consider FinecoBank to be the closest contender to Vanguard for the best-performing stocks and shares ISA in the UK for 2022.

PROS

  • Decent overall fees
  • Good mobile trading platform
  • Strong background in the S&S ISA scene

CONS

  • Less value than Vanguard

4. Hargreaves Lansdown Review โ€“ Olden competitor

What’s next? Hargreaves Lansdown has been a market leader in the UK brokerage industry for decades.

In addition to a long developed research department and first-rate products in a range of indices, the platform also provides stocks and shares ISAs.

Your two routes in opting for Hargreaves Lansdown stocks and shares ISAs - D.I.Y. or pre-made portfolios.

If you choose to use them for the former, to create your own bundle of holdings, you have access to more than 2,500 shares, funds, as well as trusts, giving you a hands-on option for deciding where your money filters. Handily, the platform also provides ready-made shortlists containing most commonly used selections according to specific investment objectives such as funds for retirement, established companies, and those seeking income for retirement.

Opening an account in a Hargreaves Lansdown stocks and shares ISA requires a minimum deposit of £100. Or, you can choose to do a minimum monthly deposit of £25 per month for a minimum of four months. As for the option for ready-made portfolios, the team at Hargreaves Lansdown selects a collection of shares for you - according to your risk tolerance and investment goals.

Pre-made portfolios however require a minimum deposit of £1,000. So not only are you getting a higher barrier-to-entry than you would with Vanguard, you’re also paying a heftier annual commission at 0.45%, with quite remarkably high share dealing charges. These can even reach as much as £11.95.

PROS

  • Supremely well-established since 1981
  • Simple transparency
  • Good selection of funds

CONS

  • Bad value compared to Vanguard

5. Halifax Review โ€“ Simple Choice for Beginners

Halifax Bank could be your go-to for simplicity, at rates that roughly match or undercut some of its more comprehensive competitors in the space like Hagreaves.

Once again, these do not meet the standards of Vanguard.

You get a slightly better annual account management charge than Fineco, at 0.24% if you only use the Halifax platform, and it’s the same as Fineco if you opt for their fund management services. And unlike Vanguard, individual trades are not commission free bar, quite AI premium, of £12.50 per trade.

Not to mention surplus charges if you purchase non-UK listed shares, which means this platform quickly stacks up in compounded premiums, as a shares and stocks ISA investment service - particularly if small amounts are being invested.

Nonetheless, you need to be a customer of Halifax or Lloyds TSB (which is the parent company) in order to use the broker. The focus is on long-term investment. And in a world that is inundated with too many options, Halifax focuses things into a rather small basket of investment choices, including three pre-made portfolios.

You are exposed to about 2,000 mutual funds, 300 investment trusts, and over 500 ETFs. With no fees for exiting early, if you choose to transfer to another ISA in the future.

PROS

  • Both global and UK listed stocks available
  • Slightly better-value than Hargreaves in certain circumstances
  • Focused fund selection

CONS

  • Many surcharges and fees with no fractional shares

Top Best Stocks and Shares ISAs - Buying Guide ๐Ÿ“š

This section is good for beginners who are still learning how stocks and shares ISAs work. It should also help you to discern between the top stocks and shares ISA to use:


ISAs Explained

Individual Savings Accounts (ISAs) let you grow investment-powered savings without paying any taxes on capital gains. ISAs became available in the UK in 1999 to encourage people to save.

They provide earnings through direct interest gained on your untaxed savings, as well as investing in stocks and shares without any tax-liability for returns made.

ISAs actually replaced a pre-existing system called Personal Equity Plans (PEPs). Today, there are a range of different types of ISA, including innovative finance ISAs which are based on money loaned to small businesses. And the lifetime ISA which features government bonuses to help people save enough for retirement or buying a new home.

What are the benefits of an ISA?

For UK residents, ISAs are a solid approach to saving - indeed, they remove any unnecessary tax burdens on investments.


Money
  • โ˜‘๏ธ The key advantage of ISAs are it is tax-free: investors can earn a tax-free income from investment revenue. 
  • โ˜‘๏ธ The secondary advantage is developing the habit of saving.

No matter if you have a specific savings target you want to or you just want a full emergency fund reserved for life’s unexpected moments, an ISA can offer a straightforward way to do this.

Several different types of ISA’s exist so it’s easy to quickly find it harder to figure out which ISA is best for you. Below, we provided an overview of how the different types work.


The 5 Types of ISA Explained

Banking

There are five main types ISA:

  • Cash ISAs
  • Stocks & Shares ISAs
  • Lifetime ISAs
  • Innovative Finance ISAs
  • Junior ISAs

โ˜‘๏ธ Cash ISA

A Cash ISA is mostly similar to a standard savings account. These are open to UK residents aged 16 or older, letting you save and earn interest. The main winning-point is you won’t have to pay any tax on these interest gains. By comparison, most building societies or banks charge income tax for any earnings over £1,000.

Although many people consider Cash ISAs to be a more secure route because it isn’t subject to changes in the market, economic factors do kick in. If the rate of inflation is faster than your interest, then your savings could actually diminish a bit.

โ˜‘๏ธ  Investment ISAs: Stocks and Shares

With a Stocks and Shares ISA or investment ISA, your funds are used for investments that have low risks, rather than primarily earning by interest. Which means your money is allocated to investments in different securities such as bonds, shares, commodities, and even property.

Once again, there are no taxes on capital gains, including for any dividend earnings. You are exposed to market risks. There is also no guarantee that you will get higher returns than a cash ISA would give. Many savers use this kind of ISA in order to test out the effect of the law of Compounding - wishes where market profits are automatically reinvested, in a similar way to a business reinvesting its earnings into itself.

History suggests that those who invest in the FTSE 100 index across a decade-long span since 1984 saw a 89% likelihood of getting a positive return on their investment.

โ˜‘๏ธ  Lifetime ISA

Investing into a Lifetime ISA helps you to save for your first property and/or retirement, again without taxes on capital gains. Any savings in this kind automatically gains a 25% bonus - which means £1 added to every £4 paid into the account, for up to a grand each year.

โ˜‘๏ธ Innovative Finance ISA

An Innovative Finance ISA turns you into a money-lender - earning a fixed rate of interest to individuals and businesses who need money for the operations. You bill this out using a peer-to-peer lending platform, which again is tax-free.

The risk of this is a borrower defaulting, and there are no protections by the Financial Services Compensation Scheme.

โ˜‘๏ธ Junior ISA

Junior ISAs (JISAs) give children away to start saving from early on. Launched in 2011 as a way for the government to replace the Child Trust Funds, Junior ISAs offer tax-efficient savings for your kids. These can be opened at any point, as long as the child is under 18, is a UK resident, and isn’t already subscribed to a Child Trust Fund.

Junior ISAs have an annual Junior ISA allowance cap - wish for the last year was a maximum added to the fund of £9,000.

Furthermore, Junior ISA come in two different forms: Junior Cash ISAs and Junior Stocks & Shares ISAs. Both of these have an annual maximum. But unlike adult ISAs, of which you can open a new account each tax year, your kid is limited to only one Junior Cash ISA and one Junior Stocks and Shares ISA account during their childhood.

The main thing to note is that the only person who has actual ownership of the Junior ISA account is your child (not even you!). Which means, when they reach 18, they can dip into their money and their Junior ISA automatically converts into an adult ISA, so that they can continue to build their wealth into the future in a tax-efficient manner.

If you’re not pleased with the capital gains your child is receiving or think that fees are two high, you have the option to transfer your current Junior ISA to a different provider. Just be sure that your choice offers the optimal child ISA rates. If this is the transfer happening across Junior Cash ISAs from different providers or that same between different Junior Stocks and Shares ISAs, you have to transfer the total balance.

However, if you decide to alternate between a Junior Cash ISA and a Junior Stocks and Shares ISA, you can opt to transfer part of the balance or all of it. And if your child is subscribed to the Child Trust Fund, you can transfer the full benefits of this into either kind of Junior ISA, on the condition that you use the government transfer form. Once the Trust Fund transfer has happened, the account will be closed.


FAQs

How Can I Withdraw S&S ISA Funds?

Stocks & shares ISAs require you to sell off shares, funds, or bonds enough to meet the withdrawal request amount. This will then be reimbursed to you as cash. It may take a couple of days for the sale to be completed. 

What Happens if I Withdraw Funds From my ISA?

You’re free to switch between providers who have the same kind of ISA, in order to seize higher returns. Indeed, to ensure you are on the ideal plan, this may be key, particularly for cash ISAs, which have a fixed interest rate. There may be exit fees incurred, but many do this for free.

Or opt to alternate between the 3 three primary types of ISA - cash ISAs, stocks & shares ISAs and innovative finance ISAs - so long as your savings or investment goals match. It’s worth mentioning that this isn’t as straightforward as changing your traditional savings account provider. There are more technicalities.

Nevertheless, as long as you follow the following ISA transfer rubric, it should be smooth:

First of all - do not withdraw any of your account funds into actual cash! This immediately removes your tax benefits. Instead, fill out the transform after speaking to the new provider. This new service will then handle the swap, including contacting your current provider, and migrating your funds.

It’s also possible to do transfers from an ISA account open from a different year - this is particularly helpful if you accumulated multiple ISAs from previous tax years and want to merge them into a more easily manageable account.