New Dividend Tax Allowance

jrm

Hi. Maybe I'm missing a point here, but, with the introduction of the new dividend tax allowance of £5k per tax year surely the benefit of an Stocks & Shares ISA is considerably reduced?

badger09

jrm wrote: »

Hi. Maybe I'm missing a point here, but, with the introduction of the new dividend tax allowance of £5k per tax year surely the benefit of an Stocks & Shares ISA is considerably reduced?

There is still the CGT benefit for long term holdings:)

(Not to mention not having to keep records of dividends received)

le_loup

badger09 wrote: »

(Not to mention not having to keep records of dividends received)

This being a vital consideration even for people who will never come close to considering CGT

bigfreddiel

jrm wrote: »

Hi. Maybe I'm missing a point here, but, with the introduction of the new dividend tax allowance of £5k per tax year surely the benefit of an Stocks & Shares ISA is considerably reduced?

Well some of us have considerably bigger dividends than £5k, and the biggest benefit is that you do not have to report it on your tax return. Outside of an ISA you would need to report all your dividends even though it may be less than £5k. That's a major benifits.
Cheers fj

coyrls

jrm wrote: »

Hi. Maybe I'm missing a point here, but, with the introduction of the new dividend tax allowance of £5k per tax year surely the benefit of an Stocks & Shares ISA is considerably reduced?

For basic rate tax payers, the new dividend tax allowance has reduced the amount that is tax free and so, if anything, has strengthened that case for a S&S ISA.

HappyHarry

jrm wrote: »

Hi. Maybe I'm missing a point here, but, with the introduction of the new dividend tax allowance of £5k per tax year surely the benefit of an Stocks & Shares ISA is considerably reduced?

Most ISAs cost the same as non-ISA accounts. If the cost is the same, why would you not use an ISA anyway to reduce any potential CGT or Dividends Tax?

EdGasket

HappyHarry wrote: »

Most ISAs cost the same as non-ISA accounts. If the cost is the same, why would you not use an ISA anyway to reduce any potential CGT or Dividends Tax?

Why not use an ISA? Well the ISA ties up your money such that when you sell a share or fund, the money just sits there not earning any interest and one feels 'pressured' into reinvesting it so it isn't just sitting there. If you take the money out, you can't put it back in again. With just a dealing account you can move money in and out much more freely and so don't end up with a big wedge in the account and maybe just buying some investment for the sake of investing in something as is the case with ISAs.

Note: I appreciate that interest rates on savings are next to nothing now so the above reasoning is less relevant than a few years back when money not invested in a dealing account could be earning a reasonable return in a savings account while cash in a S&S ISA earns nothing.

bigfreddiel

EdGasket wrote: »

Why not use an ISA? Well the ISA ties up your money such that when you sell a share or fund, the money just sits there not earning any interest and one feels 'pressured' into reinvesting it so it isn't just sitting there. If you take the money out, you can't put it back in again. With just a dealing account you can move money in and out much more freely and so don't end up with a big wedge in the account and maybe just buying some investment for the sake of investing in something as is the case with ISAs.

Note: I appreciate that interest rates on savings are next to nothing now so the above reasoning is less relevant than a few years back when money not invested in a dealing account could be earning a reasonable return in a savings account while cash in a S&S ISA earns nothing.

What you're suggesting here is a sure fire way of losing money, any trading, drives up costs, so chopping and changing will only line someone else's pockets. So yet another good reason to sack it all into an ISA and just watch it grow - minimum gestation time 5 years, good luck fj

Pincher

There are theoretical exercises that make ISAs useful.

Bed and Breakfast
===========
If you need to bed and breakfast, you can sell in the dealing account, and buy it in an ISA. After a month/year, do the reverse.


Artificial loss
========
For e.g. buy BT.A at £5, let it drop to £4, sell it to harvest the loss, which you can now carry forward for use in future years.
Buy BT.A inside an ISA at £4 at the same time. Sell at £5 when it recovers. You now have some useful losses for the years that you sell Buy To Let properties, and pay 28% on capital gains.

If the trade goes against the plan, and you made some money buying at £5, you have my sympathy.

bigfreddiel

Pincher wrote: »

There are theoretical exercises that make ISAs useful.

Bed and Breakfast
===========
If you need to bed and breakfast, you can sell in the dealing account, and buy it in an ISA. After a month/year, do the reverse.


Artificial loss
========
For e.g. buy BT.A at £5, let it drop to £4, sell it to harvest the loss, which you can now carry forward for use in future years.
Buy BT.A inside an ISA at £4 at the same time. Sell at £5 when it recovers. You now have some useful losses for the years that you sell Buy To Let properties, and pay 28% on capital gains.

If the trade goes against the plan, and you made some money buying at £5, you have my sympathy.

Nuts, just keep it simple, keep it in an ISA wrapper, job done.
Any attempts to crystallise losses make gains, dealing WILL LOSE you money big time. Don't even bother, unless you want to line your brokers pockets, 'Where are all the yachts?'

Cheers fj

DavidT67

"If you take the money out, you can't put it back in again."

Choose a flexible ISA provider and you can nowadays.