Stocks & Shares ISAs
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yes you make a good point. Regarding platforms, this shows the a difference between having an ISA set up by a stockbroker and an ISA set up with a fund supermarket Dividends come from exchange-listed things such as ETFs and investment trusts (and of course shares) . In a stockbroker ISA account there is always likely to be a charge per transaction, and therefore reinvestment costs can be significant if you set automatically to reinvest, but an alternative is that you can leave it as cash within the account until there is a meaningful amount to use. With funds set up as unit trusts or OEICs, however, which is how the word fund is used in the MSE article, and typically bought in a fund supermarket ISA account such as Cavendish, JimJames page 6 above explained how income is treatedI don't understand why the relative costs of dividend re-investment are not covered in the comparison of platforms as surely this is pretty important?
Funds are mentioned on this website which are trackers, such as offered by L&G and HSBC, but this week Investors Chronicle says that these are worse than ETF trackers.There is a huge amount of superb information available. Starting from books and websites on investing, to articles in the broadsheets, and even in the tabloids, describing in very simple terms how you get going with S&S ISAs.
Of interest to all beginner investors in http://www.telegraph.co.uk/finance/personalfinance recently:
it is hard to find a good IFA,
the latest star fund managers, which are popular to invest with, sometimes come a cropper, and,
on the topic of switching to cash gradually versus all at once, to go with my suggestion of discussing with someone at Share Centre, there is a DiY suggestion of how to spot the time when you might consider switching from stockmarket to cash https://uk.finance.yahoo.com/q/ta?s=%5EFTSE&t=my&l=off&z=l&q=l&p=m300&a=&c= i.e. move to cash at present if FTSE 100 falls to 6,500 https://uk.finance.yahoo.com/q/ta?s=%5EFTSE&t=1y&l=off&z=l&q=l&p=m300&a=&c=0 -
I have had a stocks and shares ISA for a number of years now. I have always contributed the maximum yearly allowance and have invested this is individual shares. The shares have appreciated markedly so I am now in the happy position of having over £320k in the one account.
My concern is how safe are my investments in the individual companies shares should the platform provider go bust? Should I be spreading my share portfolio over other ISA providers? Is my limit £85k per provider in which case should I open up another three so as to provide the maximum protection? If I do have to do this, how do I go about it, sell the shares and re-buy, or just get them transferred?
I nice problem to have, but I would imagine that others will now have an ISA worth more than £85k due to the FTSE reaching record levels. My concern could be shared by more people!0 -
Your limit for investments is £50K per firm. The £85K applies to cash deposits only. http://www.fscs.org.uk/what-we-cover/eligibility-rules/compensation-limits/
Your ISA provider will have your holdings in trustee accounts that would continue to exist if the provider went bust, and your investment would not be available to any creditors of your provider.0 -
Hi,
MSE's Stocks & Shares ISAs guide says:
"Any dividends paid out within an ISA are taxed at 10%"
HMRC says:
"You don't pay any tax on the interest or dividends you receive from an ISA and any profits from investments are free of Capital Gains Tax."
I can't post a link, but it's the top result if you google "isa dividends tax".
Which is true? Is MSE's guide outdated (it discusses the new 2014 NISAs)?
Many thanks.0 -
Basically both are true. Dividends get paid with 10% tax already deducted.
If you have your dividends paid into an ISA, you do not have to pay further tax for those dividends, regardless of your overall tax liabilities. But you also cannot reclaim the 10% withheld at source - I suppose that is why MSE say dividends are taxed at 10%, because they actually are......HMRC are also correct to say that, within an ISA, you don't pay tax on dividends you receive, because you do not pay any tax on what you receive.
If your dividends are paid outside an ISA, they may be subject to further tax, depending on your overall tax liabilities.0 -
Basically both are true. Dividends get paid with 10% tax already deducted.
If you have your dividends paid into an ISA, you do not have to pay further tax for those dividends, regardless of your overall tax liabilities. But you also cannot reclaim the 10% withheld at source - I suppose that is why MSE say dividends are taxed at 10%, because they actually are......HMRC are also correct to say that, within an ISA, you don't pay tax on dividends you receive, because you do not pay any tax on what you receive.
If your dividends are paid outside an ISA, they may be subject to further tax, depending on your overall tax liabilities.
Ok that is a bit confusing to me. Lets say im a basic taxpayer and im getting dividends from my US stock, its charged 15% at a source in USA, and it will charge further 10% here in UK?
Even if my US shares located in an ISA?
Will be there any difference for me which account to have, a regular share dealing account, or Stocks and shares ISA. Or both will be charging my dividend the same way? Or ISA will have an advantage?0 -
Vladislavs wrote: »Ok that is a bit confusing to me. Lets say im a basic taxpayer and im getting dividends from my US stock, its charged 15% at a source in USA, and it will charge further 10% here in UK?
Even if my US shares located in an ISA?
Will be there any difference for me which account to have, a regular share dealing account, or Stocks and shares ISA. Or both will be charging my dividend the same way? Or ISA will have an advantage?
Actually regarding dividends, as i understand it, it's a 10% tax credit rather than a tax. I.e. There is no "tax deducted".
ISAs will be better, especially for HR tax payers, as they will have no further liabilities on dividends. If held outside, they will need to declare this in their SA to HMRC."If you will change, everything will change for you." - Jim Rohn
I simply use these forums to share my knowledge, reinforce my learning and experience as an IFA. Please remember, if your circumstances are complex, speak with your local IFA from Unbiased or VouchedFor directories for regulated financial advice.0 -
As RickyC points out, the US dividend comes with* a 10% tax credit from HMRC to use against any UK income tax liability (this doesn't apply to all countries), so as a basic rate taxpayer with a liability of 10%, there is no further tax to pay and no benefit from using an ISA.Vladislavs wrote: »Ok that is a bit confusing to me. Lets say im a basic taxpayer and im getting dividends from my US stock, its charged 15% at a source in USA, and it will charge further 10% here in UK?
Even if my US shares located in an ISA?
Will be there any difference for me which account to have, a regular share dealing account, or Stocks and shares ISA. Or both will be charging my dividend the same way? Or ISA will have an advantage?
If you were a higher rate taxpayer and not using an ISA, then you can offset your 15% withholding tax paid to the USA against any further UK income tax liability through foreign tax credit relief, so you don't in effect pay any more overall than you would have on UK dividends. However, within an ISA you would be limited to just paying the 15% US withholding tax, so in this case there would be a benefit from the ISA.
Edit: * Where I say 'comes with' a 10% credit, I should probably say 'qualifies for' a 10% credit, since the dividend actually paid is treated as 90% of the income liable for tax in the calculation.0 -
....as a basic rate taxpayer with a liability of 10%, there is ..... no benefit from using an ISA.....
The immediate benefit I can think of is that there is no need to keep detailed records for tax purposes, and no need to declare the investment to HMRC.
There could also be an immense longer term benefit of holding the investment in an ISA, e.g. legally avoiding CGT and/or higher rate tax, or even any tax, exemption of investment for entitlement to certain benefits.0 -
I completely agree, I was merely analysing the benefit with respect to income tax liabilities in that specific situation.The immediate benefit I can think of is that there is no need to keep detailed records for tax purposes, and no need to declare the investment to HMRC.
There could also be an immense longer term benefit of holding the investment in an ISA, e.g. legally avoiding CGT and/or higher rate tax, or even any tax, exemption of investment for entitlement to certain benefits.0
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