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    • cashlash
    • By cashlash 15th Mar 17, 5:57 PM
    • 2Posts
    • 0Thanks
    Stocks and shares ISA tax rules
    • #1
    • 15th Mar 17, 5:57 PM
    Stocks and shares ISA tax rules 15th Mar 17 at 5:57 PM
    Hi, just here for advice

    I currently have a stocks and shares ISA which I may need to withdraw soon but was wondering if anyone could clarify the tax rules which apply to a stocks and shares ISA when the investment gets withdrawn as a basic-rate tax payer.

    For example, say if I put 10,000 into an S&S ISA this year and it grows by 2000 after 3 years I would have an investment worth 12,000.

    My current understanding is that the 2000 growth will not be subject to income tax or capital gains tax so I would get to keep 100% of this, but would the 10,000 that was put in originally count towards my personal allowance and anything above the threshold would be taxed as income?
Page 1
    • bowlhead99
    • By bowlhead99 15th Mar 17, 6:58 PM
    • 7,837 Posts
    • 14,311 Thanks
    • #2
    • 15th Mar 17, 6:58 PM
    • #2
    • 15th Mar 17, 6:58 PM
    Not, none of it is subject to income tax.

    The tax man says, I have a few basic rules:

    1) don't put more than x amount of money into an ISA in one tax year.

    2) don't contribute to more than one ISA of the same type in the same tax year otherwise it would be more of a pain to check you haven't broken rule number 1.

    3) if it's an S&S ISA where you can choose what type of investment to hold, your ISA manager should make sure the type of investments you buy are in the approved categories of investments that can be held in an ISA and if not or if their statuses change (like if a listed company you're holding goes private you can't keep it even if you don't want to sell up)

    Stick to the rules and all the income (interest, dividends, property income distributions, and all the capital gains you make, are all free of UK tax. Keep it in the ISA or take it out of the ISA, the tax man doesn't care.

    And the original 10k you put in, you can have it back whenever you want - taxman doesn't care about that either. That 10k is your money and presumably you paid whatever appropriate amount of tax when you first got it (e.g. earned it from an employer, received it as profits on some other type of investment in the past, etc).

    If you stick 10k in an ISA and then through smart investing or good fortune turn it into 10 million, you can take that all out with no tax to pay.
    Last edited by bowlhead99; 15-03-2017 at 7:00 PM.
    • cashlash
    • By cashlash 15th Mar 17, 7:53 PM
    • 2 Posts
    • 0 Thanks
    • #3
    • 15th Mar 17, 7:53 PM
    • #3
    • 15th Mar 17, 7:53 PM
    Great answer, thanks!
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