How Much Tax Will You Pay?

You say paid with a tax credit of 20% taken off
I belive it should be 10%

So if im a basic rate tax payer and only have a small amount currently invested, do i need an ISA or is it only when i have much more invested that it becomes necessary?

I still think it's still worth using an ISA, because over the course of a few decades your initially small amount could easily turn into something quite impressive - and as kevinksa says, you never know when you might pick an unexpected winner.

Also, bear in mind that you can't transfer shares into an ISA later - you'd have to sell up, pay in the cash, and then buy new shares.

Foolish best,
Alan
TMFBoing

But if you are, you will need to declare your dividends on your tax return and pay the difference.

It also turns out that you'll have to declare investment income outside of an ISA of more than 10k per annum even if you're a basic rate taxpayer - even if there is no further tax to pay.

Keep it in an ISA - it reduces the paperwork.

It does of course cost you fees to hold shares in an ISA, so if you are a basic rate taxpayer you might actually be worse off. Often the trading costs of shares within an ISA are higher than otherwise too. Small holdings might be better not in an ISA for standard rate taxpayers. If you did get a multibagger, you don't have to crystalise all of the capital gain in the same tax year. Split it either side of the tax year end and your capital gains allowance is double.

Even if you don't see any gain in wrapping your shares in an ISA, I can't see how you stand to lose.
Never forget, all governments love moving goalposts.

The companies that provide these share ISA's, from the few I looked at, have a percentage charge for there use, so why would I want invest in one of those?

I hold my trading ISA with HSBC Direct and I can confirm that there are no charges apart from trading that is, and these are OK ish £12 per trade

Interactive Investor does not charge ISA admin fees, and commission is £10 a trade online.
SIPP Deal also does not charge ISA fees, and I believe their commission is about £10 online.
There are other brokers who do not charge ISA admin fees; look them up on Google or Yahoo!

Selftrade charges £35+VAT per year ISA admin fee, but allows you three free trades, normally £12.50 each online; so not much difference.
Jarvis Investment Management used to do some free ISAs; ask them if they still do.
Hargreaves Lansdown charges 0.5% ISA admin, capped at £45 p.a.
Motley Fool charges for ISA admin and uses Halifax brokers who seem to do some free or cheap ISAs: ask them.

Best ask the HMRC tax office Leo.

Alan,

For that reason, people will often sell a shareholding in order to crystalise a capital gain and write it off under that year's allowance, and then reinvest the money in the same (or different) shares some time afterwards. It's a practice known as "bed and breakfasting", and for years people would sell shares on the last day of the financial year and buy them back the next day.

All they needed to do was sell the shares late one day and buy them early the next day - hence the "bed and breakfasting" name. There was nothing special about the last day of the financial year in that respect.

Leofink,

Can anyone inform me what the tax obligations are for a foreigner investing in the UK are please?

They are likely to have tax obligations both in their own country and in the UK. Usually, whatever tax they have had to pay in the UK can be offset against the tax in their own country - but it depends on details of tax treaties between the countries and there are few absolutely across-the-board rules. Best thing for them to do is contact both HMRC and their own country's tax authorities, or use a specialist tax adviser.

richardtrump,

Yes, just like any other income, dividends are usually liable to tax when paid, and whether they are then used to buy shares or for some other purpose doesn't usually make any difference to the tax payable.

Gengulphus