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Your guide to Stocks & Shares ISAs

This is a transcript of the Stocks & Shares ISA video.

An Individual Savings Account or ISA is a wrapper that protects your investments and savings from further tax.

With a cash ISA you don’t pay tax on any interest you earn in a savings account. However, with a Stocks and Shares ISA the tax exemption also apply to any gains you make on an investment.

Within a stocks and shares ISA, you can hold individual companies, you can hold bonds, which is when you lend your money to a government or large corporate in exchange for an interest income. Or you can hold funds, which is when a fund manager pools that with other investors and uses it to buy a range of assets.

Every year everyone over the age of 18 gets an allowance to invest in a stocks and shares ISA. This year the allowance is £20,000 but if you don’t use your allowance within the tax year, you lose it.

The tax benefits of a stocks and shares ISA include not having to pay capital gains tax, which is a tax on any profit you might make when you sell investments. Similarly if your company pays out a share of profits also known as dividends then these will also be received tax-free. Finally, if you are using your ISA to invest in bonds, either issued by large companies or by governments, then you won’t have to pay any income tax on the interest paid.

If you have £10,000 or more to invest, you can open your stocks and Shares ISA with Click & Invest, where your portfolio will be managed by a professional team of investment managers and have your money actively managed by a specialist team of Investment Managers.

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The tax advantages of ISAs may change in the future and also depend on your individual circumstances.

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