How does a sock and share Isa work

hebron

With a normal cash ISA you receive your interest gross either monthly or yearly.
If I open a stocks and shares ISA how would the ISA work? I invest my money and either it goes up or down, so how does the Isa work if there is no interest.
Thanks

Cleaver

hebron wrote: »

How does a sock and share Isa work

I'm darned if I know.

To be serious and answer your question: a stocks and shares ISA is just a vehicle or wrapper to put in stocks, shares, funds etc. and not pay tax (up to a limit each year). So you don't earn set interest, your investments just go up or down. You can earn dividends and yields on your investments though, which is similar to getting interest.

Lokolo

When you sell you get a profit. So if you buy at £1, sell at £1.50 you have a 50p profit. After a certain threshold this 50p would be taxed. S&S ISA stops this tax.

ses6jwg

Do you pay tax on dividends from shares/ funds held within an ISA wrapper?

Lokolo

ses6jwg wrote: »

Do you pay tax on dividends from shares/ funds held within an ISA wrapper?

Lower rate yes. Higher rate no. There is something different about Corporate Bonds and their funds though, can't remember exact.

hebron

Would that be paid out net or gross? Is there claiming back of the Taxman or do you receive it tax free.

Thank you for your time

Cleaver

hebron wrote: »

Would that be paid out net or gross? Is there claiming back of the Taxman or do you receive it tax free.

I thought it was all tax free by the time it gets to you, but it seems otherwise from what Lokolo says.

Lokolo

Cleaver wrote: »

I thought it was all tax free by the time it gets to you, but it seems otherwise from what Lokolo says.

Wait for an expert

---

The tax benefits on stocks and shares Isas are not as good as when they were first launched. Initially, investors could reclaim the 10% tax paid on dividends (income paid to people who hold shares), however in April 2004 the 10% dividend tax credit was scrapped, so for basic-rate taxpayers dividends are taxed as outside the Isa wrapper.


Higher-rate taxpayers still gain from holding dividend-producing shares in an Isa - they pay tax at 10% rather than the 32.5% that is deducted on non-Isa investments.


Profits from shares held in an Isa are not subject to capital gains tax CGT, which means any growth on your investment is all yours. You don't even have to declare your Isa on your tax return.

http://www.guardian.co.uk/money/2007/oct/25/isas.shares

and

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/SavingsAndInvestments/DG_4016062

Cleaver

To be honest, I only starting posting on this thread to do the 'sock / darned' gag.

cheerfulcat

Hello, hebron,

The S&S ISA wrapper means that you pay no tax on any capital gains within it. There is also no tax to pay on any interest from gilts and corporate bonds. Bear in mind also that you can build up, over time, a very useful amount of money with no tax implications.



PEPs and TESSAs were a lot better but take advantage while you can.

Lokolo wrote: »

Wait for an expert

---

http://www.guardian.co.uk/money/2007/oct/25/isas.shares

and

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/SavingsAndInvestments/DG_4016062

Really? From your link from the Guardian -

The tax benefits on stocks and shares Isas are not as good as when they were first launched. Initially, investors could reclaim the 10% tax paid on dividends (income paid to people who hold shares), however in April 2004 the 10% dividend tax credit was scrapped, so for basic-rate taxpayers dividends are taxed as outside the Isa wrapper.

But I remember this - the tax credit was done away with in 1997 by one G Brown.

Lokolo

cheerfulcat wrote: »

Really? From your link from the Guardian -

But I remember this - the tax credit was done away with in 1997 by one G Brown.

Thats what I said....?