Are ISAs Tax Free?
ISAs are tax efficient, but the exact benefits can vary. You pay no
additional tax on the income from your ISA savings and investments, and
no tax on any capital gains. You don’t even have to tell the Inland
Revenue you have one, let alone what income and capital gains are
generated.
But, while cash ISAs are free of tax and corporate bonds allow you to reclaim the 20% tax on the interest payment they make, equity-based ISAs suffer a withholding tax which cannot be reclaimed. Effectively, you currently pay 10% tax on dividend income - whatever your actual rate of income. Nevertheless, there is still a significant advantage for higher rate tax payers.
In This Issue
- Editor's Note
- Employee Focus
- Credit Fall Out
- Use It or Lose It
- Pensions & ISAs
- Did You Know?
- Start Early
- Are ISAs Tax Free