Stocks & Shares ISA Calculator

A Stocks and Shares ISA shelters up to £20,000 of investments each tax year from income tax on dividends, capital gains tax on profits and income tax on bond fund distributions. What sits inside is up to you: funds, ETFs, investment trusts or individual shares. Unlike a Cash ISA nothing is guaranteed, and the outcome depends entirely on how those holdings perform. Historical UK equity returns have averaged roughly 7% to 8% nominal over the long term, which is the sort of assumption most projections are built on.

Charges come off that return before you see any of it. The projection deducts an annual percentage from the portfolio value, made up of the platform fee, typically 0.15% to 0.45% at the major providers, plus the fund's ongoing charge figure, which runs from 0.07% for a passive index tracker to over 1.5% for active management. On a £100,000 portfolio the difference between 0.22% of total charges and 1.50% is around £1,280 a year. Left to compound over decades, that gap turns into tens of thousands of pounds, which is why the fee line deserves as much attention as the growth assumption.

The projection assumes contributions at the ISA limit each year and compounds them at your chosen rate net of charges. One refinement matters more than it sounds. An arithmetic average return overstates what you actually end up with, because gains and losses are not symmetrical. A fund that rises 20% and then falls 20% has not broken even, since £100 becomes £96. Geometric mean returns are used instead for that reason, and a Monte Carlo option shows the spread of possible outcomes rather than a single line.

Over long periods the gap between equities and cash is what the wrapper is really for. The FTSE All-Share has delivered returns of that order since 1900, against 4% to 5% AER on a Cash ISA today. Across 25 years, £20k invested at 8% becomes roughly £137k, where the same money at 4% reaches £67k. That £70k gap is the equity premium, and it is payment for tolerating short-term falls. Under 5 years cash is the safer home. Beyond 10 years, equities have historically recovered and gone on to beat cash.

Cost differences between passive and active management show up in the same way. A global tracker such as the Vanguard FTSE All-World ETF charges 0.22% and holds around 9,000 companies. Active funds charge 0.75% to 1.5%, yet only about 20% of them beat their benchmark over 10 years according to the SPIVA reports from S&P. Compounded, that is the difference between £761k and £612k on £100k invested at 7% for 30 years. The usual conclusion is to build 80% to 90% of a portfolio from a low-cost global tracker and be selective about the rest.

Inside the wrapper there is no capital gains tax and no dividend tax, which changes how freely you can trade. Positions can be sold and the portfolio rebuilt without any tax consequence, and most platforms allow fund and share switches at no cost. That is what makes bed and ISA work, selling a taxable holding and rebuilding it inside the ISA. It also makes annual rebalancing back to your target allocation painless, which stops risk drifting upwards as the winners grow.

Platform choice comes down to the size of your pot rather than the brand. Hargreaves Lansdown charges 0.35% on the first £250k for a polished service and a large fund range. Interactive Investor charges a flat £12 a month, which works out cheapest once you are past £50k. Vanguard Personal Investor charges 0.15% but offers only Vanguard funds, and is the cheapest option below £80k for index investing. AJ Bell sits in the middle at 0.25%. Transfers between platforms are free, so the decision is not permanent.