Looking to make a second income from zero? With a Stocks and Shares ISA, investors can maximise their chances of growing their wealth from zero into a large and reliable income in retirement.

These tax-efficient products safeguard investors from capital gains tax and dividend tax, giving them more money to compound. What’s more, protection from income tax means not a penny is paid to the tax collector when money’s drawn down.

Finally, their focus on higher-returning assets like shares mean investors can have the best chance of supercharging their nest egg. Here’s how you could earn a £25k passive income in retirement with a high-powered ISA.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Portfolio building

With a Stocks and Shares ISA, individuals can hold a wide range of stocks, investment trusts, and exchange-traded funds (ETFs) from across the globe. Making full use of this flexibility is an important step to building large returns — it allows investors to capture different investment opportunities which, when combined, can drive significant wealth accumulation and lower risk.

What’s the ideal sized portfolio, though? There’s no one-size-fits-all answer, but I personally hold about 20-25 individual shares, trusts, and ETFs in total. This by extension gives me exposure to thousands of different growth and dividend shares.

Take Aviva (LSE:AV.) for instance. This is a classic ‘all rounder’ I just increased my holdings in, as it offers exceptional growth and income potential as the financial services market grows.

It is helped, too, by its immense brand power and investment in capital-light operations. City analysts are forecasting earnings growth of 13% in 2026 and 14% for next year. This also leads to predictions of strong dividend growth from forecasters, and therefore enormous yields of 6.6% and 7.1% for 2026 and 2027 respectively.

To round things off, Aviva shares trade on a forward price-to-earnings growth (PEG) ratio of 0.9. Any reading below 1 implies a share trading below value.

So what’s the catch? It’s possible profits and dividends could fall short of estimates if economic conditions worsen and consumers cut back. In my view, this is more than reflected in Aviva’s rock-bottom share price.

How much should you invest?

Turning an ISA from zero into one that delivers a reliable second income won’t happen overnight. So it’s important to remain patient and to let your investments grow. But how long could it take?

This depends on how much you’re investing and the size of the total return (capital gains plus dividends) each year. For someone investing £300 a month, an empty Stocks and Shares ISA could turn into a £314,500 one in less than 25 years.

That’s based on an average total annual return of 9%.

Watching the income flow

That could then be put to work to generate a second income by investing in dividend shares. With a £314,500 portfolio invested in 8%-yielding dividend stocks, an investor could enjoy a £25,160 income each year, as well as scope for further ISA growth.