What are the tax advantages of subscribing to a Stocks and Shares ISA?
Normally, income from UK shares is paid with a dividend tax credit. The tax credit can not be reclaimed regardless of whether the shares are held directly, or within a collective investment. This applies whether an investment is within or outside an ISA. Outside an ISA, lower and basic rate tax payers have no further Income Tax liability, but higher rate tax payers will have additional Income Tax to pay. However, if held within an ISA, all investors, including higher rate tax payers, have no further liability to Income Tax. By investing in an ISA you are also protected from paying any Capital Gains Tax on any increases in the value of your investment.
