ISAs here to stay

Primrose

Forgive my ignorance, but exactly what is a S&S ISA? Have never heard of them.

Primrose

Whoops, having thought about it, presume you mean a Stocks & Shares (equity) ISA?

cheerfulcat

of course you would loose all the long-term tax advantage if you move it - dividends from shares are paid net of tax

It's true that since Brown abolished the reclaiming of the tax on the dividend an S&S ISA doesn't have the same attractions to a basic rate taxpayer, but don't forget about CGT; if you used your full £7000 ISA allowance every year and had a halfway decent return, it wouldn't be long before the annual CGT exemption would start to look rather mean...

ReportInvestor

Careful no-one gets trampled in the stampede to change to share ISAs :rolleyes: .

Most people don't use their annual £4K share ISA allowance as things stand.

cheerfulcat

No chance, Primrose; at least, not under Mr Brown.

By the way, welcome to MSE

Cheerfulcat

Primrose

In that case I'm wondering exactly what other changes they can make which will make very much difference to investors ?

ReportInvestor

Much of it will be window dressing.

It would be nice if the limits were raised. A nice touch might be to equalise mini-ISAs @ £4K (whether cash or share mini-ISAs) while raising the overall maxi-ISA limit to £8K.

This would remove a complication originally caused by the government's idiocy in listening to the insurance industry lobby about insurance mini-ISAs.

If he kept the £3K cash ISA limit but raised the share ISA limit to £7K (£10K for a maxi-ISA it would sound better on budget day but make less difference to ordinary savers and investors.

Primrose

Do you think TOISA's (Tessa Only ISAs) will also be subject to this future flexibility? Read the BBC article but these weren't mentioned.

stphnstevey

cheerfulcat wrote:

It's true that since Brown abolished the reclaiming of the tax on the dividend an S&S ISA doesn't have the same attractions to a basic rate taxpayer, but don't forget about CGT; if you used your full £7000 ISA allowance every year and had a halfway decent return, it wouldn't be long before the annual CGT exemption would start to look rather mean...

I always thought (maybe naively) that S&S ISA's were tax free? Although if I probed my mind further (which doesn't take that long!) I can't think why.

Do they grow free of CGT? But then do you pay CGT when you take the money out?

Can someone explain dividend tax and why Mr Brown has interfered?

oldfella

share ISAs receive dividend payments net of tax. They are not subject to higher rate tax or CGT

Mike