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ISA Risk Warnings
Please note that investments in a Stocks & Shares Junior ISA are not guaranteed and can fall in value as well as rise. Ultimately you could get back less than you invest.
You should ensure that you only invest what you can comfortably afford to lose and understand your attitude to risk. Therefore consideration needs to be given to your attitude and willingness as well as your ability and capacity to take risk. Please refer to our ISA Facts sheets
Investments in Stocks & Shares ISAs do not contain the same degree of capital security as investments in deposits. Stocks and shares ISAs are designed as medium to long term investments of, for example, five years or more.
Within an ISA all gains will be free of capital gains tax and a tax credit will be reclaimed on interest from fixed interest investments. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future. Please visit http://www.hmrc.gov.uk/index.htm
You don't have to pay any Income Tax or Capital Gains Tax on the growth of the investments in a stocks and shares ISA, as long as you keep the investments within an ISA. But the tax advantages will depend on your personal tax position. Tax rules are subject to change over time and the benefits to your child depend on their individual circumstances and/as do your benefits within your own personal adult ISA. Buying share-based investments through ISAs will only save you tax if you're a higher-rate taxpayer, or are likely to pay Capital Gains Tax.
Unlike Cash ISAs, Stocks and Shares ISAs are not always tax-free. If you're a basic rate taxpayer dividends receive the same tax treatment regardless of whether they're in an ISA or not, with the 10% tax credit being applied. If you're a higher rate taxpayer though, you will have a tax advantage because you don't have to pay the additional 22.5% that would normally be due on dividends. If, however, you buy a stocks and shares ISA where the underlying investment pays interest - such as corporate bonds - then the interest will be tax-free regardless of the tax band you fall into. ISA income does not need to be declared on tax returns.
If you're 65 or over, your income from a cash or stocks and shares ISA won't affect your age-related personal allowance.
If you're not an experienced investor, please seek advice from an independent financial adviser (IFA) who is authorised by the Financial Conduct Authority.
TSCTRADE is a participant in the Financial Services Compensation Scheme. Full details can be found at www.fscs.org.uk