Do dividend payments in ISAs count towards your yearly ISA allowance?

fromscratch

Hello, I hope you are all well. 

If you invest inside a S&S ISA/LISA with funds or ETFs that pay dividends, do those dividends count towards the ISA yearly allowance?

So say I invested exactly £20k into my ISA and got a dividend of £100- or even £1- will I have exceeded the allowance and need to inform HMRC? Or do dividends work more like interest which can be accrued on top of the yearly £20k allowance?

Thank you for your help

Alexland

No income or investment gains don't count against the contribution limit.

Contributions are where you are adding new money into the account.

eskbanker

fromscratch said:

So say I invested exactly £20k into my ISA and got a dividend of £100- or even £1- will I have exceeded the allowance and need to inform HMRC? Or do dividends work more like interest which can be accrued on top of the yearly £20k allowance?

The latter - the £20K annual allowance relates only to money deposited into ISAs from outside by the account holder, not anything arising from within the wrapper.

fromscratch

Thank you so much for your replies, really appreciated !