Reinvesting dividends within a shares isa

Marcust22

I have a shares isa with Selftrade and have received dividends on my shares. A few questions:

1. I understood that such dividends are taxed at 10% but this doesn't seem to have happened. Do I have to declare this on my tax return for it to be taxed (I currently don't complete a tax return) or will the ISA provider do this in the same way they seem to tax the interest paid on casn held within the ISA?

2. Can I use the dividends to purchase more shares within the same isa?

3. The shares within the ISA were obtained through an Employee Share Save Scheme. I transferred them into the ISA to the isa limit. There were some residual shares so I transferred these my Dealing Account. The dividend paid and sitting within my ISA, however, is the total dividend for all shares i.e. those within my ISA and those within my Dealing Account - should this have been split between the ISA and the Dealing Account (particularly if I can reinvest the dividends in shares because otherwie I have put dividends from non-ISA shares into the ISA).

Thanks in advance, Mark.

cheerfulcat

Hi, Mark,

1. Dividends come with a tax credit attached which satisfies the liability of a basic rate taxpayer. This used to be reclaimable within an ISA but sadly no longer. There is no further liability within the ISA and you don't need to declare the income for tax purposes.

2. Yes, you can re-invest the dividends - they don't count toward your overall ISA allowance.

Sorry, can't really help with 3 except to say that it's possible that the shares were in the ISA went they went ex-dividend and that's why the payment was credited there. To be absolutely honest I think you shouldn't worry; unless it was a very large amount and you are normally taxed at the higher rate you wouldn't have an extra tax liability outside the ISA anyway.

Marcust22

cheerfulcat,

Thanks so much much for your speedy response. Much appreciated. And it wasn't a lot of money at all so I don't think I'll lose too much sleep over it!

Once again, thanks.

Mark

cheerfulcat

No problem, Mark. And welcome to MSE!