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Stocks and Shares ISAs explained
Stocks and Shares ISAs explained

We explain everything you need to know about tax-efficient ISAs: what they are, how they work, and what your allowance is.

James avatar
Written by James
Updated over a week ago

In this article, we look at ISAs.

​Please note: Chip can't provide financial advice so you may want to seek guidance from a qualified professional if you are unsure or have detailed questions about investing. Your capital is at risk.

What is an ISA?

ISA stands for Individual Savings Account, it is a tax-efficient account, or a ‘tax wrapper’ for a savings or investments account, which means you don’t pay any tax on any returns on money held in an ISA.

There are four kinds of ISAs (see ‘How many ISAs can I get’ for more on this), Chip is offering access to a stocks and shares ISA, which means you won’t need to pay tax on any returns you earn with your funds.

You can only put a limited amount of money into an ISA every tax year, this is known as your annual ISA allowance. You can read more about ISAs on the official government website:

What is my ISA allowance?

All UK residents over the age of 18 (or 16 for cash ISAs only) currently have an annual £20,000 ISA allowance (for the 2022/23 tax year, ending 5 April 2023).

Any unused allowance doesn't roll over into the following tax year. For example, if you don’t use your full £20,000 this year (2022/23), and only put in £15,000, you can’t carry the remaining £5,000 over to the next tax year and invest £25,000 into an ISA in 2023/24.

EXAMPLE: How your ISA allowance works

You open a stocks and shares ISA in the 2022/2023 tax year and put in your full allowance of £20,000 before April 2023.

The investments perform well* over the following year and increase in value to £21,000 by April 2024. You do not need to pay any tax on those returns.

In the 2023/2024 tax year, you can top with an additional £20,000.

So now you have;

  • £20,000 (your initial investment in the 2022/2023 tax year);

  • + £1000* (tax-free capital growth);

  • + £20,000 (your next investment in the 2023/2024 tax year);

Giving you a total of £41,000 in your ISA.

Any subsequent growth will be tax-free, and you can repeat this process every tax year.

*EXAMPLE ONLY. This example is simply to explain how ISA allowances work with capital growth, in no way are we saying this is an expected cash return you will see from an investment product we list.

- Please consider all the risk/return information carefully before investing, and remember your capital is at risk

What are the benefits of an ISA?

The main benefit of an ISA is that the returns are tax-exempt, in essence, you don't pay income tax or capital gains tax (CGT) on gains made within an ISA. If you complete a tax return, you do not need to declare any, income or capital gains from money in an ISA.

How many ISAs can I have? / Does my ISA allowance cover all my ISAs? / Can I have a Stocks and Shares ISA and a cash ISA?

There's no specific limit for how many ISAs you can hold overall. You're welcome to open and deposit into as many ISA types as you would like. You can also open multiple ISAs of the same type. However, please bear in mind that your £20,000 allowance is split across all of your ISAs.

There are four types of ISAs:

  • Cash ISA

  • Stocks and Shares ISA (this is the type of ISA we're describing in this article)

  • Innovative Finance ISA

  • Lifetime ISA (also known as LISAs)

Example: having multiple ISAs In one tax year, you could save;

  • £5,000 in a Cash ISA;

  • £4,000 in a LISA;

  • £1,000 in an Innovative Finance ISA;

  • and £10,000 in a Stocks & Shares ISA.

Is the Stocks and Shares ISA a Flexible ISA?

Yes, it is! This means that you have the freedom to withdraw money from your Stocks and Shares ISA, and then pay it back in at a later date (within the same tax year), without it counting against your annual £20,000 ISA allowance.

Please note that Chip does not provide tax advice or financial advice and tax treatment depends on individual circumstances and may be subject to change in the future

Example of how Flexible ISAs work

Say you pay £10,000 into your ISA, and then choose to withdraw £5,000 a month later. With a regular ISA, this would mean you have £10,000 of your annual ISA allowance remaining for the current tax year.

However, with Chip’s flexible ISA, you would still have £15,000 of your annual ISA allowance remaining

Can I transfer my ISA from Chip to another provider?

If you’d like to transfer your ISA to another ISA provider, you will need to contact your new ISA provider to initiate the transfer process.

The new provider will send you their ‘transfer in’ form and give you all the details on how to proceed. All ISA transfers are handled digitally by our ISA manager, Seccl Custody Limited (Seccl), read more about them in our legal details guide.

Your new provider can initiate the Stocks and Shares transfer by contacting Seccl via email at, or electronically through their ISA transfer solution provider.

Seccl can also be found at 20 Manvers St, Bath, BA1 1JW. Please be aware that we are currently unable to accept posted transfer forms. Feel free to contact us with any further Stocks and Shares ISA transfer questions via email at

Please note: for any Cash ISA transfer requests, please email

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