ISAs have generous tax benefits that can help you maximise your investment returns.
When you invest in an ISA, you’re not charged Capital Gains Tax (CGT) on any profit you make when you sell your investments and withdraw money from your account. Everyone has an annual CGT exemption allowance of £3,000 in the 2024/25 financial year. You’ll be charged CGT on any profit made above this annual allowance if you didn’t invest in an ISA.
Any losses made on your investments in your Stocks & Shares ISAs can’t be used to offset capital gains on your other investments.
ISAs also protect any income from your investments in your tax-free wrapper.
Outside of an ISA, you don’t pay tax on the first £500 of dividends you get in the 2024/2025 tax year. Above this allowance, you pay tax of 8.75-39.35%, depending on your income tax band. If you invest in an ISA, you don’t pay a thing.
The tax treatment of a Moneyfarm Stocks & Shares ISA depends on your individual circumstances and may be subject to change in the future.