Re Shares/ low income/ Do I need a isa?

pearl123

Hi, I got into shares via the Royal Mail float.


I'm not working and therefore do not pay tax.


If I make gains under the 10,900 threshold. Am I right that I don't have to put my shares in an shares isa to avoid CCT.
I will be investing under 1,000.

I'm using X-o, so I presume they just deduct anything that's owing?
I have got a book on shares but just have not had time to sit down with it yet.
Thank you for your answers in advance.

Reaper

As you are below the tax thresholds you will not have to pay any additional tax and there is no advantage in using an ISA, unless your tax position is likely to change in the future.

The only other advantage of an ISA is if you are asked to do a tax return in which case it is a tiny bit easier since you do not have to include ISAs on your form.

pearl123

Thanks for answering Reaper. That's good news for the time being.:)


If I start working I think I'll cash in the shares before hand just to make life easier. And then from then onwards an isa.

Reaper

Actually you probably won't have to pay tax even when you are working unless you are a higher rate tax payer as dividends are already counted as taxed (and that tax cannot be claimed back before you ask!). Also very few people ever make use of their annual Capital Gains Allowance so that probably won't affect you either.

Furthermore if the ISA you plan to take out in future is with XO there is no need to sell up, just ask them to "Bed and ISA" your shares. They will sell them and re-buy inside the ISA with reduced costs.

pearl123

Thank you that's really helpful.

EdGasket

There is one big advantage of having an ISA for shares and that is if you ever buy any property shares like British Land classed as a REIT (Real Estate Investment Trust) then you get to keep the gross dividend in the ISA; outside an ISA you lose 20% in tax whether you pay tax or not.