Are withdrawals from S&S isas completely tax free?

Luke_M

I have had a look but can't find clarity to this question.
Can I withdraw unlimited amounts from my uk stocks and shares ISA and pay absolutely zero tax on the withdrawals? Either income or capital gains tax.
Any info clarifying this would be very much appreciated.

benbay001

Yes.

But dont forget, you have paid income tax on the money when you put it in.

bowlhead99

Anything inside an ISA is ignored by the tax man. You can get interest, dividends, property income distributions and capital gains completely free of UK income tax and CGT.

When you withdraw money from inside an ISA and move it to 'the outside world' it will no longer have that tax protection from that point onwards because it's no longer in a tax wrapper. So if you decided to then save or invest your withdrawn money in things which generate income or gains in the future, you could be exposed to taxes.

But yes, you're right in your suspicion that the action of withdrawing money from an ISA account to a non ISA account is not something that gives you taxable income or gains so there is nothing to pay.

It is just like if you are moving money from Cash ISA A to non-ISA bank account B, or from stockbroker account C to bank account D. There are no taxes when doing those things because you're not making any income or any gains. Any income or gains you made in the past, on qualifying investments inside the tax-protective wrapper of an ISA, are not seen by the tax man and don't need to be declared.

Luke_M

benbay001 wrote: »

Yes.

But dont forget, you have paid income tax on the money when you put it in.

Thanks for the answer. Is this stated clearly anywhere that you know of?
It seems too good to be true. If I've got 250k in a S&S isa generating me 10% per year, I can withdraw the 25k profit every year and not lose a penny of it?

Zanderman

Luke_M wrote: »

Thanks for the answer. Is this stated clearly anywhere that you know of?
It seems too good to be true. If I've got 250k in a S&S isa generating me 10% per year, I can withdraw the 25k profit every year and not lose a penny of it?

Er, yes.

This is the whole point of ISAs - ISAs are not taxed. It's not too good to be true. It is what they are.

You don't need it stated any more than that surely?

george4064

Luke_M wrote: »

Thanks for the answer. Is this stated clearly anywhere that you know of?
It seems too good to be true. If I've got 250k in a S&S isa generating me 10% per year, I can withdraw the 25k profit every year and not lose a penny of it?

Correct, however to deposit £250,000 into an ISA wrapper would take you several years due to the annual ISA allowance. Currently set at £20,000 for this tax year 2019/2020.

Say the annual allowance remained at £20,000 for the foreseeable future (generally speaking the ISA allowance has gradually increased over the years), it would take you approximately 12 years to deposit £250,000 in total.

ColdIron

Luke_M wrote: »

Thanks for the answer. Is this stated clearly anywhere that you know of?

HMRC?

You do not pay tax on:

• interest on cash in an ISA
• income or capital gains from investments in an ISA

If you complete a tax return, you do not need to declare any ISA interest, income or capital gains on it.

https://www.gov.uk/individual-savings-accounts/how-isas-work

It seems too good to be true. If I've got 250k in a S&S isa generating me 10% per year, I can withdraw the 25k profit every year and not lose a penny of it?

Yes, it's the whole point

Gadfium

Luke_M wrote: »

Thanks for the answer. Is this stated clearly anywhere that you know of?
It seems too good to be true. If I've got 250k in a S&S isa generating me 10% per year, I can withdraw the 25k profit every year and not lose a penny of it?

Yep, totally tax free. Its all written down here: https://www.gov.uk/individual-savings-accounts/how-isas-work


Say you bought (in your ISA) $1000 of Apple shares back in 2004 when they were about $10 each. You just left them in your S&S ISA, never touched them or added to them.


Your 100 shares would now be worth $25,800 or about £20K. You could withdraw that and do what you want with it without paying any tax or CGT.:beer:


<edit> I need faster finger...been ninja'd by ColdIron!

Luke_M

Thanks everyone for the answers. Very helpful

Albermarle

If I've got 250k in a S&S isa generating me 10% per year, I can withdraw the 25k profit every year and not lose a penny of it?

Of course an ISA with a 10% return must be invested in relatively risky investments . Therefore with a market crash might lose 100K of value in a few days . It's not just a matter of tax.

Mr.Saver

Just want to add one thing to this topic. If you have an America passport or lives overseas, gains from an UK ISA is often not tax free.