Stocks and shares ISA vs regular share account: what's the difference?

March 4, 2013 3:44 PM

I'm looking to invest 1000 GBP in shares. I expect the profits to not reach the threshold for capital gains tax. Do I need to sign up to a Stocks and shares ISA in order to not pay tax?

I'm looking to invest about 1000 GBP in shares. I currently have no ISA savings account.

I've been looking at various websites and Hargreaves Lansdown seems to be quite popular. They offer two accounts I'm interested in

1. Stocks and shares ISA - 0.5% annual fee
2. Fund & share account - 0% annual fee

Both accounts charge 12 GBP per transaction.

The benefit of the first account is that you pay no capital gains tax on any profits. Capital gains tax applies to any profit over 10,600 GBP from selling shares (and other assets). However, since I am only investing 1000 GBP, I don't expect to make 10,600 GBP profit. I'd be very happy with 10%!

So if I only make, say 100 GBP profit over the year, is it better to just sign up for the regular fund & share account? That way, I pay no tax, and also skip the 0.5% annual fee. Am I thinking about this correctly?

posted by fry to Work & Money (1 answer total)

sorta- you only pay cap gains when you take a capital gain. - so you would only pay taxes on dividends if you don't trade in the taxable account.

Also make sure you have good look at the fee schedule for both accounts. You might find out that for a small account like this those can become a meaningful % of your assets.

But yes, in theory you are correct.
posted by JPD at 3:56 PM on March 4, 2013