ISA – The Tax Rules!


Most of us are familiar with the term ISA and have a general understanding of what they are however, are you aware of the main tax benefits of an ISA? If you aren’t so familiar with the main benefits, you can find them here!


1. ISA income and gains do not have to reported on a tax return

2. Income and gains on an ISA are ignored in determining a person’s adjusted net income for the purposes of Child Benefit tax charge

3. There is no Capital Gains Tax (CGT) on the realisation of investments within an ISA

4. There is no UK tax on dividends in a stocks and shares ISA, although the 10% tax credit cannot be reclaimed (this tax credit in set to be abolished in 2016/17)

5. Interest is received UK tax free in all ISAs

6. ISA transfers can be made between the cash and stocks & shares components of an ISA and vice versa, with no restrictions

7. AIM (Altenative Investment Market) Shares held within an ISA are subject to Inheritance Tax rules and so if shares qualify for relief, can qualify for 100% IHT business property relief after 2 years of ownership.

The annual subscription limit for 2015/16 is £15,240 and if the full allowance is not used in a tax year it is lost and cannot be carried forward, so don’t forget to maximise your allowance each year!


If you have a question about ISAs or would like to make an appointment to see a Financial Adviser, don’t hesitate to get in touch via the form below and we will get back to you as soon as possible.

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Please note that we do not give financial advice over the telephone.