The advantage of a shares-based ISA component

altyfc

Hi everyone

Sorry if this is a naiive question.

I can see the obvious benefits of a cash ISA - I don't get taxed on the interest from those savings.

But what about if I opt for the shares-based component? What are the advantages there, over and above just investing in shares outside of an ISA? Do I not get taxed on any gains that I make (or don't make) on those savings...?

If I wanted to make use of my shares-based component, and had no intention of accessing the money for years to come (think 5-10, or more, years), then what would you think is a sound investment? I don't mind an element of risk for a greater return, but am not really interested in high risk.

Thanks.

macca64

No Capital Gains Tax on shares ISA, also no need to declare dividends etc on tax return for higher rate taxpayers. No further tax to pay on dividends for higher rate taxpayers.

dunstonh

No capital gains tax, no further tax on dividends, reclaim the tax on fixed interest funds and no impact on age allowance (for over 65s).

If I wanted to make use of my shares-based component, and had no intention of accessing the money for years to come (think 5-10, or more, years), then what would you think is a sound investment?

A tax wrapper is not an investment. Its what you put inside the tax wrapper that matters. You can have many investments inside different tax wrappers. For instance nowadays you can have the same investment funds unwrapped (i.e. unit trust) or in an ISA, pension or an onshore or offshore investment bond. The tax wrapper is just the rules relating to tax and possibly maturity method (in case of pension) of the investments within the wrapper.