A meeting of opportunities?
Discussion
I have a further £15-20K to invest in the stockmarket, and I'd like to do it today to catch any post-referendum surge. My long term aim, however, is to invest for dividend performance as I live on investments.
I also have an unused ISA allowance for 2016/17 - and this gave me an idea. If I took out a stocks and shares ISA containing 3-4 solid performing good dividend payers, and assuming I'm already at my £5K tax-free divident allowance, could I take dividends from those shares tax free? Or does the ISA system only work for income tax?
And is it possible to set up such a thing in one day?
I also have an unused ISA allowance for 2016/17 - and this gave me an idea. If I took out a stocks and shares ISA containing 3-4 solid performing good dividend payers, and assuming I'm already at my £5K tax-free divident allowance, could I take dividends from those shares tax free? Or does the ISA system only work for income tax?
And is it possible to set up such a thing in one day?
Yes, you can take dividend income out of an ISA without liability to tax.
I doubt you could get an ISA opened, funded and invested same day though.
For that, and to catch the post-referendum upside that you mention, you would be better off opening a spreadbetting account and buy the same shares to the same value using that, which you can do almost immediately. Then open your ISA and close the transaction in the spreadbetting account when you buy the shares in the ISA in coming days or weeks.
NB any profits or dividends in the spread bet account are also free of Income Tax and CGT at this level.
I doubt you could get an ISA opened, funded and invested same day though.
For that, and to catch the post-referendum upside that you mention, you would be better off opening a spreadbetting account and buy the same shares to the same value using that, which you can do almost immediately. Then open your ISA and close the transaction in the spreadbetting account when you buy the shares in the ISA in coming days or weeks.
NB any profits or dividends in the spread bet account are also free of Income Tax and CGT at this level.
Thanks Sid - good news, and rather to my surprise I managed to open an ISA trading account with Computershare this morning!
The snag now is that from my shortlist of shares, four are with Computershare (HSBC, Rio Tinto, Vodaphone, Persimmon), two with Equiniti (Carnival, Astra Zeneca) and one with Capita (L&G)... I had hoped to avoid multiple accounts. Can shares be transferred from one to the other afterwards?
I must also throw the predictable question into the mix - what do the assembled and redoubtable massiv suggest by way of other shares? Short term priority is something that's been affected by referendum uncertainty, longer term priority is solid dividend peformance.
The snag now is that from my shortlist of shares, four are with Computershare (HSBC, Rio Tinto, Vodaphone, Persimmon), two with Equiniti (Carnival, Astra Zeneca) and one with Capita (L&G)... I had hoped to avoid multiple accounts. Can shares be transferred from one to the other afterwards?
I must also throw the predictable question into the mix - what do the assembled and redoubtable massiv suggest by way of other shares? Short term priority is something that's been affected by referendum uncertainty, longer term priority is solid dividend peformance.
sideways sid said:
Yes, you can take dividend income out of an ISA without liability to tax.
Confirmed. Anything else you have is completely irrelevant."Fortunate" people may choose to suppress their normal dividend income and take ISA income as well.
Say, for example, someone draws £11k of pension, takes £31k of normal dividend income and has £10k of ISA income. Total income £52k.
- First £11,000 tax free annual allowance
- Next £5,000 tax free dividend income
- Next £26,000 of dividends taxed at 7.5% [£1,950]
- Final £10,000 of ISA income tax free.
- Income £52,000
- Tax payable £1,950
- Effective tax rate, less than 4%
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