Stocks & Shares ISA Calculator

A Stocks and Shares ISA shelters up to £20,000 per tax year of investments from income tax on dividends, capital gains tax on profits, and income tax on bond fund distributions. Unlike a Cash ISA with guaranteed returns, growth depends on market performance of the selected funds, ETFs, investment trusts, or individual shares held within the wrapper. Historical UK equity returns have averaged approximately 7-8% nominal over the long term.

Platform fees and fund charges reduce your effective return. The calculation deducts an annual percentage from the portfolio value, typically comprising a platform fee (0.15-0.45% for major platforms) plus the fund's ongoing charge figure (OCF) ranging from 0.07% for passive index trackers to 1.5%+ for active funds. On a £100,000 portfolio, the difference between 0.22% total charges (cheap index tracker on a low-cost platform) and 1.50% total charges costs approximately £1,280/year, compounding to tens of thousands over decades.

The projection models annual contributions at the ISA limit with compound growth at the assumed rate minus charges. Volatility drag means the arithmetic average return overstates actual compound growth — a fund returning +20% then -20% over two years doesn't break even (£100 becomes £96). The calculator uses geometric mean returns for more realistic projections and optionally models Monte Carlo scenarios to show the probability distribution of outcomes.

Why S&S ISA outperforms Cash ISA long-term. UK equity market (FTSE All-Share) has returned 7-9% nominal annual since 1900. Cash ISA today 4-5% AER. Over 25-year horizon, £20k invested at 8% becomes £137k vs £67k at 4%. The £70k difference is the 'equity premium' compensating for short-term volatility. For investment horizons under 5 years, Cash ISA is safer. Over 10+ years, equity-based investments have historically always recovered and exceeded cash.

Index funds vs active management. Vanguard FTSE All-World ETF (0.22% fee) tracks ~9,000 global stocks. Active funds charge 0.75-1.5% but only ~20% beat their benchmark over 10 years (S&P SPIVA reports). Compounded, the fee difference is enormous: £100k at 7% for 30 years = £761k passive vs £612k active. Choose low-cost global tracker for 80-90% of your portfolio.

Tax-efficient rebalancing within ISA. ISA contains no Capital Gains Tax or Dividend Tax. You can sell positions and rebuild your portfolio without tax implications — particularly valuable for 'bed and ISA' moves (selling taxable shares and immediately rebuilding inside ISA). Most platforms allow free fund/share switching within ISA. Use this freely — annual rebalancing back to target allocation keeps risk in check.

Choosing a platform. Hargreaves Lansdown (0.45% platform fee, premium service): excellent UI, large fund range. Interactive Investor (£12/month flat fee — best for £50k+): cheap for large balances. Vanguard Personal Investor (0.15% platform, Vanguard funds only): cheapest under £80k for index investing. AJ Bell (0.25% platform): mid-range option. Free transfers between platforms — easy to switch if circumstances change.