Stocks and Shares ISA

Using a Stocks and Shares ISA For Dividend Investing

One of the best ways to buy Shares is through a Stocks and Shares ISA

Using an individually invested Stocks ISA allows the investor to pick their own shares while gaining all the tax advantages of an ISA.

In 19/20 you are entitled to invest using a Shares ISA up to the value of £20,000. This allowance renews on 1st April each year.

Investing through a Shares ISA shelters the shareholding’s from both income tax on the dividend income and any capital gains tax on the profits made from the sales of the shares. This is a great mechanism to protect your investment returns from the tax man.

Here are some things to consider then using a Shares ISA

Some things to remember when using a Shares ISA

  • Adding money over time to different Shares will reduce your investment risk, diversify your portfolio and allow you to get benefit from the investing consolidation effect
  • If you don’t use an ISA allowance during a tax year you lose it
  • Provider of Stocks ISA leverage different charges
  • Share ISAs are transferable into Cash ISAs
  • If you have a Shares ISA, check their charges, they could be overcharging you or charging too much to transfer to another provider
  • Always use at least a five year investment horizon when buying your shares
  • Consider the risks and reward of investing in shares against your appetite for risk

What sort of charges do providers leverage on Stocks and Shares ISAs

To give you an idea of how much you can expect to be charged, the annual fee currently (2020) charged by Hargreaves Lansdown is 0.45% for the first £250,000 invested, 0.25% for investments between £250,000 and £1m with 0.1% charge for investments in excess of £1m.

Also remember you will receive broker fees on all your share buys and sales.

Use my dividend yield analysis of the FTSE 100 and 250 to help you decide what shares to invest in.

All the best, .

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