Scottish Friendly My Choice Investment ISA - Advice Please

jimjames

Neil_Lovatt wrote: »

I have to disagree with JimJames that you may not benefit from using an ISA if you are a basic rate taxpayer. There are a whole host of benefits from using an ISA for a basic rate taxpayer and that is especially the case for the with profits option which has a capital guarantee over 10 years.

That doesn't mean that you shouldn't look at non ISA options but I wouldn't dismiss the concept of an ISA so easily.

Good luck with your research on this.

Neil Lovatt

I agree there are advantages in an ISA and use them myself. However my statement was specifically about the level of investments that was being discussed. At £30 per month you'd have invested £360 after 1 year and £3600 after 10 years. You would need growth of over £10,000 before CGT became an issue ie your investment had quadrupled. As a basic rate taxpayer there is no additional tax to pay on dividends received and no tax reclaim inside an ISA. If a better/cheaper option is available outside an ISA then at £30 pm there isn't an immediate tax saving from using the ISA.

I may have missed something so what exactly would the tax benefits be for someone investing £30 per month inside an ISA vs outside it?

Neil_Lovatt

Thanks jimjames.

I think that your argument holds if:
- you are ALWAYS a basic rate taxpayer.
- you are comfortable that you will never exceed your CGT allowance.
- you are investing only in UK equities.
- you are more likely to use a buy and hold strategy.
- you are happy completing a self assessment form as required.

When it comes to accessibility then a lot of the above "if, buts & ands" just put people off but the ISA takes all of that away. I'm the first to admit that if you are OK and comfortably understand all of the above then you should balance off the additional cost (if any) of the ISA over a direct holding. In my experience that list of conditions above would put the vast majority of non advised clients off.

My main point however was an ISA can be extremely useful when it comes to holding assets which would not be subject to the CGT regime. An investment with a guaranteed underpin for example.