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£5,000 Dividend Allowance

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Hello, Could anyone tell me if the new £5,000 tax free dividend allowance covers income from funds held outside an ISA.
I have looked extensively but cannot find an authoritative source to confirm this.
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  • ColdIron
    ColdIron Posts: 9,164 Forumite
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    Ask yourself why would you need a dividend tax allowance within an ISA which is free from dividend tax
  • kevin52
    kevin52 Posts: 156 Forumite
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    That's clear enough, thanks.
  • kevin52
    kevin52 Posts: 156 Forumite
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    I did ask myself why not use an ISA and the answer i got was it was full.
  • aspiration_2
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    Does this mean that SS ISA is useful only if one has dividend income in excess of £5000?
  • badger09
    badger09 Posts: 11,249 Forumite
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    aspiration wrote: »
    Does this mean that SS ISA is useful only if one has dividend income in excess of £5000?

    No it doesn't.

    S&S ISA also means any gains are free of CGT.

    And there is no need to keep any record of dividends or purchases/disposals for tax purposes.
  • talexuser
    talexuser Posts: 3,500 Forumite
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    aspiration wrote: »
    Does this mean that SS ISA is useful only if one has dividend income in excess of £5000?

    No, it's also free of capital gains tax, to get 5k in dividends you might have 150k in funds or shares, after a few years you might well be liable if cashing in with gains above 11k or so.
  • Linton
    Linton Posts: 17,248 Forumite
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    Two other reasons for using an S&S ISA:
    1) Capital Gains Tax, though this is unlikely to be a concern for most people
    2) No need to keep transaction records for 7 years in case HMRC ask for them.

    Since an S&S ISA doesnt normally cost any extra (2) is a good enough reason.
  • ColdIron
    ColdIron Posts: 9,164 Forumite
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    Also worth noting that if you hold bonds, or anything that pays interest rather than dividends, these are free from income tax
  • taylornj
    taylornj Posts: 297 Forumite
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    As well as bonds. If you hold REIT's these are treated as income even if called a Dividend, and S&S ISA providers can get these paid gross without tax deducted. Otherwise these are paid after tax @ 20%, any tax deduced can be reclaimed by tax payers in the zero rate band, higher rate tax payers would pay 40%, 45% and need to pay the difference.

    British Land and Land Securities are examples of REIT's.

    http://www.britishland.com/investors/dividends/reits-dividends-and-uk-tax

    Now the question is does the £5,000 dividend allowance include REIT's or not, so the other reason for S&S ISA, you don't need to know the details of complex tax treatment for anything inside the S&S ISA.
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