Introduction to Tax and ISAs

Judderman_2

Good Morning All,


Now it’s probably best to start off with the fact that I know absolutely nothing about taxes, and being a lowly graduate I have never had to come into anything to do with taxes until now, so any help will be much appreciated.


Anyway, my dilemma is:-


Over the course of the last financial year, I have been buying and selling shares within an ISA. Now admittedly it’s just been a small amount (still have £4,791 of my allowance left); however the company I have been investing in is XEL (Xcite Energy). My current holding has increased to £10,200; and although I will be top slicing as I go, I am aiming to sell out completely when I have reached £20,000.



My main worry, is whether I have to be wary of any tax? I originally believed that when you bought shares in an ISA, this meant it was exempt from any CGT; however upon reading other forums, people have been mentioning that CGT starts to incur once your profits pass £10,000. Is this true, or does this only affect higher earners (I'm currently only working a 9k a year part-time job)?



Also with ISA self-select accounts, do you have to fill out any tax returns or anything like that?

Apologies if this is all Nursery school stuff, just saving up to give the OH the best possible wedding day as well as getting us on the right footing for married life, so don't want to make any mistakes


Judderman

Aegis

Nothing to worry about. CGT isn't payable on gains made within an ISA wrapper. The £10,100 allowance is for direct holdings.

Judderman_2

Thanks a lot, didn't think had to as I'm sticking to ISA'ble shares for that very reason; just when everyone starts talking about withdrawing their funds etc. and the various jargon comes out, it's quite daunting.

MrBeans

If you sell out completely, keep the cash inside the ISA - unless you need to spend it of course.

Once you take it out of the ISA anything you put back in to the ISA counts as part of your annual £10,200 ISA subscription.

Well done making good profits. But be wary of expecting spectacular gains to go on for ever!

jamesd

If you do have any holdings outside the ISA, it's also worth knowing that you have to report to HMRC if the total value of sales is more than four times the CGT allowance, even if the profit is less than the allowance. The S&S ISA is a nice time and aggravation saver.