Benefits of buying shares in an isa

A stocks and shares ISA enables you to invest your money in the stock market, rather than simply saving it.

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A recognised stock exchange means most major markets, such the London or New York Stock Exchanges. A recent-ish rule change, made in , means that you can put AIM shares into an ISA as well.

Once your investment is safely sheltered within a share ISA, it will be protected from both income tax and capital gains tax CGT.

Share ISA rules and Stock ISA rules

The income tax benefits of share ISAs are less pronounced than for cash ISAs and, for the time being, only higher rate taxpayers benefit. Note that the rules regarding the taxation are being given a major overhaul from 6 April onwards. Amounts above this will be taxed at 7.

These changes will mean that the tax protection offered by ISAs will become more important for those with larger portfolios. In the case of funds, there are often no additional charges to pay by sheltering your investments within an ISA, so you are often getting your tax protection at no additional cost. If you are investing in individual shares you may have some additional charges to pay for using an ISA.

This is stamp duty, which is payable when you purchase most shares apart from those listed on AIM and funds. It is charged at 0. There is no stamp duty to pay when you sell.

This is an execution-only service and does not give investment advice. Of course, investing is not without risk: How the tax treatment advantages might benefit you will depend on your circumstances — and the tax man might change the rules in the future. If in any doubt as to whether a Shares ISA is right for you, please seek advice.

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