Benefits of ISA Investments

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Benefits of ISA Investments

Benefits of opening an ISA can be gained for both Income Tax and Capital Gains Tax (CGT), as well as the standard benefits, which include:

• You do not have to declare your ISA on your tax return.

• Your ISA manager will either receive income gross of tax or reclaim the savings tax from HM Revenue and Customs on your behalf – meaning less hassle for you.

Income Tax Benefits

• Any money held in the cash component of an ISA is entitled to a tax reclaim of 20%.
• Higher rate taxpayers, who would normally pay 32.5% tax on investments outside an ISA wrapper, are free from doing on dividends from equity investments.
• Any corporate bonds held in an ISA are entitled to receive a tax reclaim of 20%.
• The interest paid on cash, held for a short period in a stocks and shares ISA, will be taxed at a rate of 20%, but higher rate taxpayers will suffer no further tax liability.

Capital Gains Tax

Any gains made from investments sold within an ISA are free of CGT, although it is important to remember that you cannot offset any losses against gains made elsewhere.