Is a stocks and shares ISA right for you? - J.P. Morgan Asset Management

Is a stocks and shares ISA right for you?

A stocks and shares ISA – or Individual Savings Account – is a tax-efficient way to help build long-term savings and boost your future wealth.

Every adult can invest up to £20,000 into an ISA in the 2018/19 tax year. This can be split between a cash ISA, and a stocks and shares ISA, the latter of which allows individuals to invest in equities and bonds.

Tax-efficient savings

Investing in a stocks and shares ISA (or any other type) allows you to keep more of your gains, since less is handed over to the taxman. ISAs offer three main tax savings for investors:

  • Capital gains tax exemption

    There is no capital gains tax (CGT) to pay on any investment gains from ISAs. If you are saving over a longer period of time and using the allowance each year, this can be a significant advantage.

  • Income tax savings

    Higher and additional-rate tax payers do not have to pay any additional tax on share dividends received within an ISA. In addition, the income received on bonds is paid tax-free; this applies to basic-rate taxpayers as well.

  • Tax-free withdrawals

    There are also tax savings when you come to cash in your ISA. If you take a regular income from these savings plans you don’t have to declare this on your tax return and there is no further income tax to pay. This isn’t the case with income taken from a pension.

Finally, these plans can be transferred to a spouse free of inheritance tax when you die. A surviving spouse does not have to cash in these assets, but they can be added to their ISA allowance for that year.

Exciting investment opportunities


A stocks and shares ISA allows investment in equity markets, bond markets and even a range of multi-asset funds, which will include cash and property holdings.

A stocks and shares ISA allows investment in equity markets, bond markets and even a range of multi-asset funds, which will include cash and property holdings.


Investing in assets – such as shares and bonds – is one of the best ways to try to inflation-proof your savings over the long term.

Investors can buy individual shares or invest in funds or investment trusts. These pooled funds can help investors diversify their holdings, particularly in global markets, in a cost-effective way, especially for those with relatively small sums to invest.


Annabel Brodie-Smith, communications director of the Association of Investment Companies, says: “Investment trusts are a way of investing in a single company which gives you a share of a much larger portfolio.

“Many investment companies invest in more than one country, like those in the global emerging markets or Asia-Pacific sectors, for example. This means investors can access the most exciting opportunities around the world with the benefit of a professional fund manager to manage their portfolio.”

The closed-end structure of an investment trust makes it ideal for longer-term investment strategies. This means investment company managers don’t have to sell their investments or keep large amounts of cash for when investors want their money back. Investment companies can also borrow money to invest – known as gearing – which can enhance performance.

Such assets can be more volatile than cash, particularly over the shorter term. For this reason you should only consider a stocks and shares ISA if you can keep your money invested long term, ideally for more than five years.

J.P. Morgan Asset Management has more than 20 investment trusts, including growth and income options, which can be invested in through a stocks and share ISA. They allow investors to benefit from the backing and resources of one the UK's largest investment trust managers.


Important information

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