Investment Calculator & ISA Optimizer

Stocks & Shares ISA: The most tax-efficient way to invest in the UK. Annual allowance of £20,000 for 2025-26, with all growth and dividends tax-free. No capital gains tax or dividend tax within the ISA wrapper.

General Investment Account: Taxable investment account where gains above £3,000 annual allowance are subject to capital gains tax (10% basic rate, 20% higher rate). Dividends over £500 allowance taxed at 8.75% basic rate, 33.75% higher rate.

SIPP (Self-Invested Personal Pension): Tax relief on contributions up to 100% of earnings or £3,600 (whichever is higher). 25% tax-free lump sum at retirement, remainder subject to income tax.

Dollar-Cost Averaging: Regular monthly investments reduce market timing risk and take advantage of volatility. Our calculator models monthly contributions to show the smoothing effect on returns.

Asset Allocation: Diversification across asset classes reduces risk. Typical portfolios range from 60/40 stocks/bonds (moderate) to 80/20 (aggressive) depending on risk tolerance and time horizon.

Index Fund Investing: Low-cost passive investing through index funds and ETFs. Annual management charges typically 0.1-0.5% compared to 1-2% for active funds, significantly improving long-term returns.

Annual Allowance: £3,000 tax-free

Basic Rate: 10% on gains above allowance

Higher Rate: 20% on gains above allowance

ISA Benefit: No capital gains tax regardless of amount

Dividend Allowance: £500 tax-free

Basic Rate: 8.75% above allowance

Higher Rate: 33.75% above allowance

Additional Rate: 39.35% above allowance

ISA Benefit: All dividends tax-free

• Use full ISA allowance first (£20,000)

• Consider spouse ISA transfers

• Harvest capital losses to offset gains

• Time dividend payments for tax efficiency

• Use bed and ISA strategies

Geographic Diversification: UK equity typically 20-40% of portfolio, with remainder in developed markets (US, Europe, Japan) and emerging markets for growth potential.

Sector Diversification: Avoid concentration in single sectors. UK market has heavy weighting in financials and resources, so global diversification essential.

Asset Class Diversification: Bonds provide stability and income. Government bonds offer security, corporate bonds higher yields. REITs provide inflation protection and income.

Time Diversification: Regular investing (pound-cost averaging) reduces timing risk. Market volatility becomes less significant over longer periods (10+ years).

Platform Fees: Annual charges typically 0.25-0.45% for ISAs and SIPPs. Some platforms offer fixed fees (£100-200) beneficial for larger portfolios (£50,000+).

Fund Management Charges: Ongoing Charges Figure (OCF) ranges from 0.05% (passive index funds) to 2%+ (active funds). ETFs typically lowest cost option.

Trading Costs: Share dealing charges £5-15 per trade. Regular investing often commission-free for popular funds. Consider frequency of rebalancing.

Hidden Costs: Bid-offer spreads, stamp duty (0.5% on UK shares), currency conversion fees for overseas investments. Factor into total cost calculations.

Hargreaves Lansdown: Largest platform with excellent research. Higher fees (0.45%) but comprehensive service and wide fund selection.

Vanguard: Low-cost option (0.15% capped) ideal for index fund investors. Limited to Vanguard funds but excellent long-term value.

AJ Bell: Competitive fees with fixed-fee option. Good for active investors with regular trading. Strong SIPP offering.

Interactive Investor: Fixed monthly fees ideal for larger portfolios. Includes free regular investments and comprehensive research tools.