Cookie Policy

We use cookies on our website and have placed these on your computer. By continuing to use our website you consent to this. For more information, including how to change your cookie settings and to disable our non-essential Google Analytics cookies, please refer to our Cookie Policy. If you do not wish to be reminded of this on each visit, please use the close button.

Tax and ISAs

  • How ISA tax benefits stack up

    Find out how ISAs are one of the most tax-efficient ways to invest

    Open an ISA today

There are different rules that apply to savings, and your income will impact the amount of tax you pay on any income and profits earned.

What is Capital Gains Tax?

Capital Gains Tax is a tax on the profit when you sell an asset that has increased in value, for example antiques, jewellery or paintings worth £6,000 or more. There are a number of exclusions and this is not a comprehensive guide but it is useful to know what is most likely to affect you as an investor.

The tax applies to the profit you make, not the amount of money you receive. There is an annual allowance of £12,000 and once your profits are higher than this figure in any tax year, you are then liable to pay Capital Gains Tax. Any money you have invested in an ISA is not subject to Capital Gains Tax, regardless of your income.

What is a Bed and ISA?

Bed and ISA is something of an odd term but it refers to a simple process. If you hold investments outside your ISA and you want to transfer them into one, a Bed and ISA allows you to do so.

As only the first £2,000 of dividends are tax-free for investments held outside an ISA, Bed and ISA is a useful mechanism. Here’s how it works:

  1. Once your Selftrade Stocks and Shares ISA is open, call our Customer Experience Centre to tell us which investments you want to move into your ISA
  2. We’ll arrange to sell said investments on the open market
  3. Once sold, we’ll move the proceeds into your Stocks and Shares ISA, and then buy them back within your ISA

This is a cost-effective way to make the best use of your ISA allowance.

To Bed and ISA, call our Customer Experience Centre on 0345 0700 720.

What happens if I accidentally break annual allowance rules?

HMRC monitor all subscriptions paid into ISAs and you can only invest a maximum of £20,000 each tax year. If you overpay in error, you can report it to HMRC by calling 0300 200 3300.

You are not allowed to subscribe to more than one Stocks and Shares ISA in the same tax year. All ISA providers report to HMRC each year, so even if you do make a mistake, as accounts are checked for subscription infringements, you will be contacted by them and asked to pay any tax due and your ISA manager will be asked to void your ISA.

 

What happens to my Stocks and Shares ISA when I die?

If you die, your ISA forms part of your estate. Your ISA is closed either when your executor closes it, the administration of your estate is complete or by your ISA provider three years and one day after you die. There will be no Income Tax or Capital Gains Tax to pay up to that date

Your ISA will be subject to Inheritance Tax unless left to a spouse or civil partner. Your ISA provider can be instructed to sell the investments and pay the proceeds to the administrator or beneficiary of your estate. It is possible to transfer the investments to your surviving spouse’s or civil partner’s ISA but they will need to have the same ISA provider as you.

Ready to get started?

I’ve still got questions!

We’re on hand to help at our Customer Experience Centre on 0345 0700 720