Is a Stocks and Shares ISA Taxable?
You might be a first-time investor wanting to put some money away to invest, and wondering – if I open an investment ISA, will I be taxed on the returns? We’ve answered your question – and more.
The short answer?
No!
The biggest benefit of the ISA account is that interest gained on the returns is safe from the taxman – these are held in a tax-free wrapper where you are not taxed on your returns.
What's a Stocks and Shares ISA?
“Stocks” and “shares” are interchangeable terms, though they have different meanings:
- “shares” can refer to owning part of one particular company
- “stocks” can refer to shares in a number of different companies
An ISA is a specific way to save which gives you tax-free returns on your savings (or in this case, investments). A Stocks and Shares ISA, or an Investment ISA, is a form of ISA.
What does it mean to say these are 'tax-free'?
The biggest feature of a stocks and shares ISA, rather than just investing in stocks and shares, is that the returns you receive from this investment are tax-free. Because of Government legislation, you are able to put a certain amount of money into an ISA and receive returns tax-free.
Every UK citizen over the age of 18 is able to open an Stocks and Shares ISA, and the upper limit for what they are able to save without taxation on returns is £20,000.
We've written a blog which outlines how these accounts work and what to consider when opening one, if you are looking to take advantage of your tax-free allowance.
Where can I get one?
Stocks and Shares ISAs are available on multiple platforms which offer a multitude of different funds which you can invest in.
You can get an Investment ISA from:
- Online fund supermarkets
- Robo-advisers
- Banks
- Stockbrokers
- Wealth managers