Stocks & Shares ISA

dat789bb

Hello!

2 months leading up to August 2020 has been an exciting one when I looked into funds, bonds, and investments and moved monies away from the almost 0% interest rate saving accounts from my Bank. I transferred some monies from my Bank's ISA (Cash ISA, presumably) and deposited it on Interactive Investor's (ii.co.uk) "Investor Plan". Purchased some US-based shares and some bonds. Today, those investments have gained in value. I am concerned about taxes. My mates have said I should have done this via a Stock & Shares ISA where I there is no Capital Gain Tax.

I intend to hold these shares for a while -- medium to long term.

There is probably nothing wrong doing it the way I did, but if I am concern about CGT, how can I make it right? It'd be a shame to see a gain of 100£ and 40-60% goes to CGT.

Any tips?

eskbanker

dat789bb said:

I am concerned about taxes. My mates have said I should have done this via a Stock & Shares ISA where I there is no Capital Gain Tax.

I intend to hold these shares for a while -- medium to long term.

There is probably nothing wrong doing it the way I did, but if I am concern about CGT, how can I make it right? It'd be a shame to see a gain of 100£ and 40-60% goes to CGT.

Sounds like you've misunderstood the rates and thresholds for capital gains tax! https://www.gov.uk/capital-gains-tax/rates explains that the rate is 10% for basic rate taxpayers or 20% for higher rate, and other pages within the same set document the fact that you have an annual allowance (currently £12,300) so it's only if you dispose of assets resulting in a chargeable gain (i.e. profit) above that that you'd pay any CGT.

However, assuming your figures weren't realistic and you've invested meaningful amounts that are worth protecting from CGT (?) then it's not too late to use Bed & ISA to get the investments into the tax-sheltered environment - https://www.ii.co.uk/ii-accounts/isa/bed-isa explains this but it essentially involves selling and rebuying the shares in a simple joined-up way.  Do you have enough headroom in your £20K annual ISA contribution allowance though?

Albermarle

Even if you are unlikely to reach and CGT or dividend thresholds for paying tax , you are supposed to keep records of your gains , in case HMRC ever enquire.
If the money is in a S&S ISA you do not have to do any of that, as all gains are tax free automatically. So less hassle if nothing else.