Answers · UK 2025/26
What is a Stocks and Shares ISA and how is it taxed?
A Stocks and Shares ISA is a tax-efficient investment wrapper. Any gains, dividends, and interest earned inside the ISA are completely free from UK income tax and capital gains tax.
Full answer
A Stocks and Shares ISA allows UK adults aged 18 or over to invest up to £20,000 per tax year in stocks, bonds, investment funds, and ETFs, with all returns sheltered from UK tax. Unlike a Cash ISA, the value can go down as well as up. There is no tax to pay on dividends, interest, or capital gains realised within the ISA, and you do not need to declare ISA returns on your tax return. You can open one with most banks, investment platforms, and stockbrokers. The £20,000 annual allowance is shared across all ISA types you hold, including Cash, Stocks and Shares, Innovative Finance, and Lifetime ISAs, noting the Lifetime ISA has a £4,000 sub-limit. You cannot carry unused allowance forward to the next tax year.
This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.