Stocks & Shares ISA
Discussion
Apologies if this has been covered before - I cannot find it if so.
I am confused about S&S ISA.
1 - Can I have a S&S ISA in the same tax year as having a cash ISA with £20k in it ?
2 - If I buy shares through a S&S ISA then I am assuming I can buy shares up to £20k maximum, but what if their value increases to £25k, do I have to sell £5k of them?
3 - Let us say my shares are now worth £25k and I sell £10k worth, can I now buy a maximum of £5k worth so I have £20k max in the ISA?
4 - What is the benefit of a S&S ISA, I already have a £11k (approx) CGT allowance per year and can't see me making £11k on a maximum of £20k of shares in a S&S ISA?
Sorry for all my dumb questions, no doubt much shaking of heads going on !
TIA.
I am confused about S&S ISA.
1 - Can I have a S&S ISA in the same tax year as having a cash ISA with £20k in it ?
2 - If I buy shares through a S&S ISA then I am assuming I can buy shares up to £20k maximum, but what if their value increases to £25k, do I have to sell £5k of them?
3 - Let us say my shares are now worth £25k and I sell £10k worth, can I now buy a maximum of £5k worth so I have £20k max in the ISA?
4 - What is the benefit of a S&S ISA, I already have a £11k (approx) CGT allowance per year and can't see me making £11k on a maximum of £20k of shares in a S&S ISA?
Sorry for all my dumb questions, no doubt much shaking of heads going on !
TIA.
From my limited knowledge and to give you a quick reply as few will be up just now. One Isa account regardless of cash or stocks and shares. 20k you can put into it any returns ie interest, capital appreciation of shares or dividends from shares is completely tax free. You can take money out but that doesn't count as reducing the amount you put in. Is you put in 20k to a stocks and shares Isa the shares give you 1k gain. Removing that 1k to a current account is tax free but does not mean you have now only put in 19k. I think all that is right but someone cleverer than me will hopefully answer in the morning .
1. Can I have a S&S ISA in the same tax year as having a cash ISA with £20k in it ?
No you can have either or, and only pay into 1 of them in any tax year, up to £20k.
2 - If I buy shares through a S&S ISA then I am assuming I can buy shares up to £20k maximum, but what if their value increases to £25k, do I have to sell £5k of them?
No, whatever the gain via capital appreciation or dividends etc is all tax free. It could go to £100k and you just leave it all in there to grow some more. tax free.
3 - Let us say my shares are now worth £25k and I sell £10k worth, can I now buy a maximum of £5k worth so I have £20k max in the ISA?
No. It does not matter what your shares are worth. Or what you draw out. All that matters is that you pay in no more than £20k per year. The ISA provider online tool usually shows exactly what you have paid in and have left each year.
4 - What is the benefit of a S&S ISA, I already have a £11k (approx) CGT allowance per year and can't see me making £11k on a maximum of £20k of shares in a S&S ISA?
Its tax free forever, not just £11k a year. You can put in £20k a year. After 10 years with £200k in there , all the dividends and growth hopefully add up. Long term you can grow many hundreds of thousands and everything it makes is tax free. There are ISA millionaires out there who started investing early on. Everything you make off the ISA is tax free, unlike drawings from a pension for example which are classed as taxable income. After all, You have already paid tax on the money you paid into the ISA.
No you can have either or, and only pay into 1 of them in any tax year, up to £20k.
2 - If I buy shares through a S&S ISA then I am assuming I can buy shares up to £20k maximum, but what if their value increases to £25k, do I have to sell £5k of them?
No, whatever the gain via capital appreciation or dividends etc is all tax free. It could go to £100k and you just leave it all in there to grow some more. tax free.
3 - Let us say my shares are now worth £25k and I sell £10k worth, can I now buy a maximum of £5k worth so I have £20k max in the ISA?
No. It does not matter what your shares are worth. Or what you draw out. All that matters is that you pay in no more than £20k per year. The ISA provider online tool usually shows exactly what you have paid in and have left each year.
4 - What is the benefit of a S&S ISA, I already have a £11k (approx) CGT allowance per year and can't see me making £11k on a maximum of £20k of shares in a S&S ISA?
Its tax free forever, not just £11k a year. You can put in £20k a year. After 10 years with £200k in there , all the dividends and growth hopefully add up. Long term you can grow many hundreds of thousands and everything it makes is tax free. There are ISA millionaires out there who started investing early on. Everything you make off the ISA is tax free, unlike drawings from a pension for example which are classed as taxable income. After all, You have already paid tax on the money you paid into the ISA.
1. Yes. You could theoretically have both as long as the total doesn’t exceed 20k, bit pointless though as cash rates are terrible.
2. No
3. No. Selling and buying within the ISA has no impact on allowances. It’s only withdrawals that might impact if the ISA provider doesn’t support ‘Flexible’ ISAs.
4. CGT and income tax free. A sizeable tax free pot can be accumulated over multiple years.
2. No
3. No. Selling and buying within the ISA has no impact on allowances. It’s only withdrawals that might impact if the ISA provider doesn’t support ‘Flexible’ ISAs.
4. CGT and income tax free. A sizeable tax free pot can be accumulated over multiple years.
bogie said:
1. Can I have a S&S ISA in the same tax year as having a cash ISA with £20k in it ?
No you can have either or, and only pay into 1 of them in any tax year, up to £20k.
2 - If I buy shares through a S&S ISA then I am assuming I can buy shares up to £20k maximum, but what if their value increases to £25k, do I have to sell £5k of them?
No, whatever the gain via capital appreciation or dividends etc is all tax free. It could go to £100k and you just leave it all in there to grow some more. tax free.
3 - Let us say my shares are now worth £25k and I sell £10k worth, can I now buy a maximum of £5k worth so I have £20k max in the ISA?
No. It does not matter what your shares are worth. Or what you draw out. All that matters is that you pay in no more than £20k per year. The ISA provider online tool usually shows exactly what you have paid in and have left each year.
4 - What is the benefit of a S&S ISA, I already have a £11k (approx) CGT allowance per year and can't see me making £11k on a maximum of £20k of shares in a S&S ISA?
Its tax free forever, not just £11k a year. You can put in £20k a year. After 10 years with £200k in there , all the dividends and growth hopefully add up. Long term you can grow many hundreds of thousands and everything it makes is tax free. There are ISA millionaires out there who started investing early on. Everything you make off the ISA is tax free, unlike drawings from a pension for example which are classed as taxable income. After all, You have already paid tax on the money you paid into the ISA.
Your understanding of points 1 & 3 is incorrect - stick to “computer stuff” No you can have either or, and only pay into 1 of them in any tax year, up to £20k.
2 - If I buy shares through a S&S ISA then I am assuming I can buy shares up to £20k maximum, but what if their value increases to £25k, do I have to sell £5k of them?
No, whatever the gain via capital appreciation or dividends etc is all tax free. It could go to £100k and you just leave it all in there to grow some more. tax free.
3 - Let us say my shares are now worth £25k and I sell £10k worth, can I now buy a maximum of £5k worth so I have £20k max in the ISA?
No. It does not matter what your shares are worth. Or what you draw out. All that matters is that you pay in no more than £20k per year. The ISA provider online tool usually shows exactly what you have paid in and have left each year.
4 - What is the benefit of a S&S ISA, I already have a £11k (approx) CGT allowance per year and can't see me making £11k on a maximum of £20k of shares in a S&S ISA?
Its tax free forever, not just £11k a year. You can put in £20k a year. After 10 years with £200k in there , all the dividends and growth hopefully add up. Long term you can grow many hundreds of thousands and everything it makes is tax free. There are ISA millionaires out there who started investing early on. Everything you make off the ISA is tax free, unlike drawings from a pension for example which are classed as taxable income. After all, You have already paid tax on the money you paid into the ISA.
MikeStroud said:
Apologies if this has been covered before - I cannot find it if so.
I am confused about S&S ISA.
1 - Can I have a S&S ISA in the same tax year as having a cash ISA with £20k in it ?
2 - If I buy shares through a S&S ISA then I am assuming I can buy shares up to £20k maximum, but what if their value increases to £25k, do I have to sell £5k of them?
3 - Let us say my shares are now worth £25k and I sell £10k worth, can I now buy a maximum of £5k worth so I have £20k max in the ISA?
4 - What is the benefit of a S&S ISA, I already have a £11k (approx) CGT allowance per year and can't see me making £11k on a maximum of £20k of shares in a S&S ISA?
Sorry for all my dumb questions, no doubt much shaking of heads going on !
TIA.
Hi, given that I train chartered financial planners for a living, I thought i'd provide some clarity.I am confused about S&S ISA.
1 - Can I have a S&S ISA in the same tax year as having a cash ISA with £20k in it ?
2 - If I buy shares through a S&S ISA then I am assuming I can buy shares up to £20k maximum, but what if their value increases to £25k, do I have to sell £5k of them?
3 - Let us say my shares are now worth £25k and I sell £10k worth, can I now buy a maximum of £5k worth so I have £20k max in the ISA?
4 - What is the benefit of a S&S ISA, I already have a £11k (approx) CGT allowance per year and can't see me making £11k on a maximum of £20k of shares in a S&S ISA?
Sorry for all my dumb questions, no doubt much shaking of heads going on !
TIA.
1.) Yes you can have a stocks and shares ISA and a cash ISA in the same year and you can pay into both in the same year. However remember that the £20,000 ISA limit applies to the amount you pay into any ISA in one tax year. So if you pay £10,000 into cash, the max you can pay into Stocks and Shares reduces to £10,000.
2.) The £20,000 limit applies to the amount you can pay in, there is no limit on the total value that can be held within ISA. There are people out there with over £1m in ISA's.
3.) Some ISA's allow you to pay back in money withdrawn, up to the £20,000 limit, however you will need to check whether that specific ISA allows you to. Remember that the limit is on the amount you are allowed to pay in in one tax year. so in your example if you were into a new tax year, you would be able to pay the whole £10,000 back in, but if you were still in the same tax year, then the limit would be £5k you could pay back in.
4.) ISA's are free from both personal income tax and CGT, so any income generated within the ISA, e.g dividends, interest, rental income is free from tax, as well as all gains being free from tax. Any withdrawals made from them do not need to be declared on a self assessment. In respect of CGT, yes you have an annual CGT allowance, but that is a separate allowance from ISA and you can use both. Typically speaking, the CGT allowance comes into play most often when you cannot invest the full amount you want to into ISA, or is used in conjunction with it to minimise the amount of tax you need to pay. Either that or it will come in when selling an asset not held in ISA, so for example a second property that is not covered by the CGT exemption that applies to your main residence.
DoubleSix said:
4. CGT and income tax free. A sizeable tax free pot can be accumulated over multiple years.
This is the BIG one. A truly massive benefit. Compound tax free growth.Although you're limited as to how much can be put in each year, once it's in, it's in - and can grow massively.
Try not to get anything out of your ISA unless you really need it. Once it's out, it's out. The £20k subscription limit applies in each and every year, so you can't take £100k out for a few months and then put it all straight back in again.
P.S. Few people can obtain any benefit through using an ISA for cash. ISA is the perfect vehicle for stocks and shares funds.
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