Investment ISA question

MattJustMatt

Hi all, new here and already asking for advice, sorry!

I hope somewhere here is knowing and willing... I have just over £30,000 saved up in my cash ISA from the last two years and I am considering moving to a stocks and shares ISA (either now or in the new tax year).

The way I understand it, is if my shares appreciate, I do not pay tax on them like I would outside an ISA (if they appreciate by more than £11k).

The real question here is that if (using a ludicrous example) my investment went up ten-fold and I now had £300,000 worth - would this full amount be transferable into future years?

If not, how does it work? - do I have to withdraw all profit (£270,000 in this example) and leave just the original £30,000?

Hope you can help!

george4064

Any investments within an ISA wrapper are completely tax free, both from capital gains tax and income tax.


Once the money is in an ISA wrapper, that cash (whether its used to buy investments or held as cash) remains within the ISA wrapper until you withdraw it out of the ISA wrapper.


There is no need to 'transfer' anything for future tax years, as long as it stays within the ISA wrapper it maintains its protection from CGT and Income Tax.


Note: Make sure you do an ISA TRANSFER to move your cash ISA money to a S&S ISA, this ensure the cash stays within the ISA wrapper (and therefore not count as a new ISA contribution).

colsten

As a novice to investments, you should stay clear of individual shares. Even £30k isn't much money to spread your risk in an economical manner.

Most people who set out investing do so by buying funds, which spread your money over a wide range of equities and other investments. If you haven't done so already, get into reading up about investment, e.g.

http://monevator.com/category/investing/passive-investing-investing/

http://www.amazon.co.uk/Smarter-Investing-Simpler-Decisions-Results/dp/0273722077

Keeping as much of your investment in ISAs or a pension will protect your investment from taxes.

MattJustMatt

Thank you so much for your reply, but I am surprised that this is the case, could you confirm my understanding is correct?:

As ISAs are cumulative, if I invested the full amount for the last three years (2013/2014 £5,760, 2014/2015 £15,000, 2015/2016 £15,240) I would have an ISA sitting at ~£36,000 (plus the interest). I now have a pot of £36000 to continue tax-free in next years ISA.

If I invested in a stock and shares ISA and (to simplify the calculations) I did especially well, appreciating by 10x the amount each year:
2013/14 deposited £5,760 and made £57,600
2014/15 brought forward £57,600, added the new allowance of £15,000, and finished with £726,000
2015/16 brought forward £726,000, added the new allowance of £15,240, and finished with £7,412,400

If at this point I transferred back to a Cash ISA, I would be allowed to save £7,412,400 tax free, plus my new allowance?

Lokolo

Yes, but there's such little chance of that ever happening.

colsten

You wouldn't be the first ISA millionaire, and one or two of them are posting on here now and again. Albeit the kind of possible gains they have been able to achieve are not on the scale you are talking about, mainly because the kind of gains you are talking about are quite unrealistic.

http://www.telegraph.co.uk/finance/personalfinance/investing/isas/11468220/How-to-join-Britains-200-Isa-millionaires.html

enthusiasticsaver

You do realise there is a chance that the value of them can go down as well don't you? The chances of 1000% gain in one year are completely unrealistic so the scenario you paint is unlikely to happen. I transferred around 36k from a matured cash isa at the beginning of the year into a stocks and shares isa into a diversified multi asset fund at a risk I was comfortable with. At the present time it is 5% down but equally could go up by 15% next year. That is stock market investments for you so it is less the tax liability you should be concerned with and more about finding a fund with the right level of risk for you.

cisamcgu

I think the OP is asking about the tax rather than hoping for 1000% increases (at least I hope they are ).