Stocks and shares ISA tax consideration

woodyt

Hi there,

I currently have £40,000 invested in stocks and shares ISA’s .

My partner and I are considering investing a further £20k each in stocks and shares ISA’s and plan to invest this money between 5 - 10 years.

We were wondering under the new Government plans to introduce 22% tax on any cash profits made on ISA’s, will we be liable for this tax should we cash all of these ISA’s in without investing further?

Many thanks for any advice.

InvesterJones

Do check out the ISA board which has lots of threads about this already. Presumably you have invested in something inside of your S&S ISA? If so, it is not in cash so you will not be making any interest on cash which is liable to be taxed. And as long as you don't have 100% of your portfolio in a money market fund you also won't attract any tax on the interest in those either.

If you sell your investments inside the wrapper, so you have a large cash balance and keep it like that, then yes, any interest that that subsequently earns, would be taxable.

masonic

Nothing has been decided definitively yet, but the charge relates to uninvested cash that is continued to be held within the ISA, or Money Market Funds if they make up 100% of the investments.

If you cash in (i.e. sell everything and withdraw), then the money won't be in the ISA and therefore any interest after withdrawal will be taxed according to whatever account it is moved to.

If you are talking about moving to 100% cash and keeping the money in the S&S ISA, then maybe don't do that, leave a token amount invested and the rest in MMF and you should be ok based on the current information.

Likewise, if you are planning on phasing an investment, providing you hold some investments, current information suggests holding the rest in MMF won't result in a tax charge.

Woodstok2000

The tax is not on cash profit in isas. There is not a lot of detail, but the tax will be on interest earned on cash held in stocks and shares isas. If your money is invested in stocks, funds etc in the ISA it will still be tax free.

Aretnap

+1. There are no proposals to tax "any cash profits" within a sticks and shares ISA.

If the ISA provider pays interest on any uninvested cash you keep within the USA, that interest will be subject to tax, similar to (but not identical to) the cash you would pay on interest you earned on a normal nin-ISA savings account. Basically to invest some of their ISA money and not just to keep the whole lot as cash.

But beyond that tax on interest (not the cash itself) the situation will be unchanged. There will be no tax on capital gains, or dividends, it even on the interest paid on gilts and bonds. If you are using your sticks and shares ISA mainly to invest in stocks and shares, rather than as a cash ISA equivalent, then the changes will have a negligible effect on you, or no effect at all.