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  • FIRST POST
    • newbie18
    • By newbie18 10th Jan 18, 11:53 AM
    • 1Posts
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    newbie18
    Shares or ISA?
    • #1
    • 10th Jan 18, 11:53 AM
    Shares or ISA? 10th Jan 18 at 11:53 AM
    I'm confused - I was hoping to invest a small amount of money in stocks & shares & looked at the website for advice. The Investment for Beginners page says investing in an ISA should always be the first port of call yet the Stocks & Shares ISA page says the ISA route is not the best option if your CGT is beneath the tax free threshold (which mine definitely is).

    I feel like I'm going in circles.
    Does anyone have advice on which page/advice to follow please?

    TIA
Page 1
    • MallyGirl
    • By MallyGirl 10th Jan 18, 12:04 PM
    • 2,272 Posts
    • 7,279 Thanks
    MallyGirl
    • #2
    • 10th Jan 18, 12:04 PM
    • #2
    • 10th Jan 18, 12:04 PM
    I can see how that might be confusing. It depends on whether you are thinking long term really.

    If you make an investment and hold it for 20 years it might well have gained more than the CGT limit and if you wanted to sell it all in one go then it would be better if it was in an ISA to avoid CGT. If you were selling more regularly then you could just sell enough to keep you under CGT. You would have some record keeping to do to prove this.
    Long term, an ISA is the way forward. It is simpler and avoids tax altogether.
    • chucknorris
    • By chucknorris 10th Jan 18, 12:05 PM
    • 9,383 Posts
    • 14,074 Thanks
    chucknorris
    • #3
    • 10th Jan 18, 12:05 PM
    • #3
    • 10th Jan 18, 12:05 PM
    I'm confused - I was hoping to invest a small amount of money in stocks & shares & looked at the website for advice. The Investment for Beginners page says investing in an ISA should always be the first port of call yet the Stocks & Shares ISA page says the ISA route is not the best option if your CGT is beneath the tax free threshold (which mine definitely is).

    I feel like I'm going in circles.
    Does anyone have advice on which page/advice to follow please?

    TIA
    Originally posted by newbie18
    I think that is poor advice, tax free dividends are IMO a much more important advantage than avoiding CGT, which can easily be avoided/mitagated outside of ISA's anyway.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    After running injuries I now also hike, cycle and swim, less impact on my joints.

    For the avoidance of doubt Chuck Norris is an actor and an ex martial artist (not me)
    • Audaxer
    • By Audaxer 10th Jan 18, 12:16 PM
    • 768 Posts
    • 374 Thanks
    Audaxer
    • #4
    • 10th Jan 18, 12:16 PM
    • #4
    • 10th Jan 18, 12:16 PM
    If you have a small amount you want to invest in stocks and shares you would definitely be better doing it within a Stocks and Shares ISA as there is no tax to pay at all, and you can currently invest up to £20k in each tax year. The decision is then which platform/broker to invest through and which funds to invest in. If you are starting out you are best considering a global diversified low cost multi asset fund. There is lots of information on this forum and on sites like Monevator.
    • BananaRepublic
    • By BananaRepublic 10th Jan 18, 12:19 PM
    • 1,041 Posts
    • 763 Thanks
    BananaRepublic
    • #5
    • 10th Jan 18, 12:19 PM
    • #5
    • 10th Jan 18, 12:19 PM
    As said above, an ISA will protect dividends from tax, as well as protecting you from CGT.

    You are best off with a collective fund such as an OEIC rather than stocks and shares. The latter requires much more research, and you must hold a portfolio (shares from many companies) in order to reduce the risk.
    • Eco Miser
    • By Eco Miser 10th Jan 18, 4:46 PM
    • 3,305 Posts
    • 3,077 Thanks
    Eco Miser
    • #6
    • 10th Jan 18, 4:46 PM
    • #6
    • 10th Jan 18, 4:46 PM
    An ISA exempts the contained investments from both income tax and CGT. It also saves you from keeping detailed records to determine how much CGT is payable when you sell (or prove there is no CGT due).
    Outside of an ISA you can have £5000 of dividends this financial year with no tax to pay, but it's still taxable income and could increase your tax band. It's only £2000 in 20018/9 and a future Chancellor could reduce that even further.
    CGT applies to more than stocks and shares, you may find you want to sell in the same year as you made a taxable gain elsewhere, or you need to sell more than is covered by one year's allowance. In an ISA that doesn't matter.

    There may be cases where you could use your ISA allowance more profitably with a different kind of ISA, but unless that applies, use an S&S ISA.
    Eco Miser
    Saving money for well over half a century
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