Tax-free £25/month beyond ISA limit

LizEstelle

I'm told that, over and above one's ISA limits, it's possible to salt away a further £25 each month into tax-free savings.

Can anyone confirm this and also advise if there are any stocks & shares type investment accounts which might be available to take amounts as low as this?

dunstonh

They are mostly rubbish and should be totally ignored. They are not available in stocks and shares form but in with profits form and suffer high charges which more than wipes out any small tax savings.

Its about time the Govt removed this exemption as it only allows people to invest into some pretty obsolete and naff investments which are only going to cause disappointment in 10 years time when they mature.

LizEstelle

So there's no reasonable way of using this 'extra allowance' with regard to the stock market?

cheerfulcat

Hi, LizEstelle

On top of your ISA allowance you also have an annual capital gains tax exemption - £8800 for this year. You don't need a nasty old with profits plan...

£25 a month is a fairly small sum and most collective investments will have a higher minimum than that but you could look at investment trusts, some of which have savings schemes starting at £30/month.

LizEstelle

cheerfulcat wrote:

Hi, LizEstelle

On top of your ISA allowance you also have an annual capital gains tax exemption - £8800 for this year. You don't need a nasty old with profits plan...

£25 a month is a fairly small sum and most collective investments will have a higher minimum than that but you could look at investment trusts, some of which have savings schemes starting at £30/month.

Interesting - if I understand you correctly, I pay say £360 into one of these schemes over the course of a tax year. It performs unbelievably well and is worth £9,160 at the end of March. I then sell up and, on the £8.8k gain, I pay NO tax..?

cheerfulcat

Yes, that's right. It's the reason why some people argue that there is no longer any point ( since GB abolished the ability to reclaim the dividend tax credit ) in a basic rate taxpayer having a stocks and shares ISA. I don't subscribe to that argument though...

dunstonh

There is little benefit in the short term but as it costs no more to utilise the ISA allowance then it makes common sense. You never know what changes are going to occur in the future and gains over 10-15-20 years could easily see you moving into an area of CGT liability. Plus you could end up as a higher rate taxpayer later.

cheerfulcat

Quite right, dh, but it's a hard slog convincing some people.

EdInvestor

AFAIK these 25 quid investments only apply to friendly society WP investments.Might be good for a bag, but not a lot else

ISAs are definitely worth it,much better than pensions.

joesan

u have to watch out and make sure the investment you are making is indeed going up in value and that u not getting it in terms of dividends!!! if you get a payout as such thats classed as income which is taxable.

LizEstelle

Thanks for the various replies. Food for thought.

I assume that the investment trust idea mentioned by cheerfulcat would not be a dividend-paying set-up but simply one in which your money rode on the share price of various companies in the 'portfolio'..?

Can anyone point me in the direction of where to start with making such an investment?