Your 2026 beginner’s guide to Stocks and Shares ISAs

One of the headline announcements in the chancellor’s Autumn Budget, delivered on 26 November 2025, was reform of the Individual Savings Account (ISA) allowance for under-65s.

Currently, adults can contribute £20,000 across their ISAs, including Cash ISAs and Stocks and Shares ISAs, each tax year.

While the overall ISA allowance of £20,000 remains unchanged, from April 2027, the Cash ISA limit will be cut to £12,000. The remaining £8,000 of this allowance will be reserved exclusively for investments. As such, you could put up to £20,000 in Stocks and Shares ISAs in a single tax year or split this allowance between Cash ISAs (limited to £12,000) and investment accounts.

Nothing will change for savers over the age of 65 who will continue to have the £20,000 allowance for Cash ISAs.

The government hopes this will encourage more people to invest in the stock market. However, according to research by The Investment Association, 1 in 5 UK adults have never heard of a Stocks and Shares ISA.

That’s why we’ve created this handy beginner’s guide to explain how this type of ISA works and highlight the potential benefits of investing in 2026. Keep reading to find out more.

How Stocks and Shares ISAs work: Your questions answered

A Stocks and Shares ISA is a tax-efficient investment account that allows you to invest your money in a wide range of assets, such as shares, bonds, and funds. Any investment growth or interest earned within a Stocks and Shares ISA is free from:

  • Income Tax
  • Capital Gains Tax (CGT)
  • Dividend Tax.

Who can open a Stocks and Shares ISA?

Anyone who is 18 or over and a UK resident for tax purposes can open a Stocks and Shares ISA. You’re also eligible if you’re a Crown employee working or serving overseas, such as a member of the armed forces or a diplomat, or you’re the spouse of a Crown employee.

The account must be opened by an individual – you cannot hold one in a joint name.

How much can I pay into a Stocks and Shares ISA?

In the 2025/26 tax year, you can pay a total of £20,000 tax-efficiently across all your ISA accounts. You could use some or all of this amount in Stocks and Shares ISAs.

Your annual allowance will reset at the start of the new tax year (6 April), and any unused allowance will be lost – it can’t be rolled over to the following year.

It’s up to you how you use your allowance; you can pay in a lump sum or make contributions throughout the tax year.

If you pay in more than your annual ISA allowance in a single tax year, any interest or gains on the excess amount will be taxable.

As mentioned above, from April 2027, if you’re under 65, £8,000 of your current £20,000 ISA allowance will be reserved exclusively for Stocks and Shares ISAs. You can choose whether to put the remaining £12,000 in a Cash ISA, a Stocks and Shares ISA or a combination of the two.

Can I have more than one Stocks and Shares ISA?

As of 6 April 2024, you can contribute to multiple Cash ISAs and Stocks and Shares ISAs in a single tax year. Just remember to bear the annual ISA allowance in mind to ensure your savings and investments remain tax-efficient.

Also, there are various fees associated with Stocks and Shares ISAs, such as platform and fund management fees. These costs can add up if you have more than one account.

5 compelling benefits of Stocks and Shares ISAs

Here are five reasons you might want to consider investing some of your savings in a Stocks and Shares ISA in 2026.

1. Your investments are protected from tax

The main benefit of investing through an ISA is that any income you receive and any capital gains you make are free from personal taxation, provided that you don’t exceed the annual subscription limit.

In contrast, any interest and gains you make on money held in a General Investment Account (GIA) could be liable for CGT, Dividend Tax, and Income Tax if your returns exceed certain amounts.

2. It’s easy to get started as a beginner investor

Research findings published by This is Money reveal that 11 million UK adults say they would like to invest but are held back by a lack of confidence. This is largely due to misconceptions about investing and a significant knowledge gap.

While it’s always wise to seek financial advice before investing, Stocks and Shares ISAs offer a simple way for beginners to get started. Setting up an account is generally a quick and easy online process, and there are lots of options for ready-made portfolios where your investments are selected and managed for you.

It’s worth speaking to a financial professional to ensure that your investment strategy is embedded in your broader financial plan.

3. There is no cap on your returns or total ISA value

While your ISA contributions are limited by the annual allowance, there are no such restrictions on the total value of your Stocks and Shares ISA or returns gained through your investments.

As such, keeping your wealth invested over the long term could deliver significant returns, allowing you to build a healthy savings pot for the future.

Indeed, This is Money has revealed that there are now more than 5,000 ISA millionaires in the UK, and the top 25 ISA investors have pots averaging £8.9 million. Moreover, Trustnet reports that 94% of ISA millionaires have Stocks and Shares accounts, while the remaining 6% use a combination of investments and Cash ISAs.

4. Plenty of choice allows you to diversify your investments

Putting all your eggs in one basket by investing in a single asset class could expose you to an unnecessary risk of losing money. That’s why diversifying your investments across asset types, sectors, and geographical regions is vital.

There is a wide range of investments that can be held in a Stocks and Shares ISA. This choice and flexibility allow you to spread the risk and align your portfolio with your values.

5. You could potentially achieve higher returns and beat inflation

If the interest you receive on your cash savings fails to keep pace with inflation, your money could lose purchasing power over time. In other words, the £1,000 you put in your Cash ISA in March 2024 might buy you less in March 2026.

Investing some of your wealth in Stocks and Shares ISAs could potentially deliver higher returns than cash savings alone, increasing your chances of beating inflation.

Of course, you might want to keep some cash savings for short-term expenses and emergencies. Additionally, the value of your investments could go down as well as up. As such, it’s prudent to seek financial advice before you start investing to ensure your strategy aligns with your tolerance for risk and your long-term goals.

Get in touch

Our financial planners can provide the knowledge and guidance you need to start investing with confidence in 2026.

To find out more, please email hello@bluewealth.co.uk or call us on 0117 332 0230.

Please note

The content of this newsletter is offered only for general informational and educational purposes. It is not offered as, and does not constitute, financial advice.

Blue Wealth Ltd is not responsible for the accuracy of the information contained within linked sites.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Blue Wealth is an Appointed Representative of Best Practice IFA Group Limited which is authorised and regulated by the Financial Conduct Authority, the registration number is 223112. Approved by Best Practice on: 23/12/25

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