Post by alender on Apr 15, 2016 23:58:45 GMT
James, you are right, the corporation tax is not retrievable in or out of an ISA so should not be part of the calculation, I am perhaps going back to the days of ACT.
Stevio, as you say it is the CGT which is the greatest saving but the new dividend tax does help to make ISAs more attractive for equities.
The reason I have large amounts of dividend is that I kept money in my companies for rainy days, average out my income when I was not working and to avoid the higher tax band when I was working. This money is best paid out in dividends as there is only small amount of taxable profit to be covered by salary and I have already paid corporation tax on the money earned. I know a number of people of similar age with Ltds who have done the same so it may not be so unusual. I already had a large equity investments but as rates in saving accounts decreased I moved a lot of my cash into equities to gain better returns but of course these come as CG and dividends.
If you don’t have a regular job and are not taking your pension there is the £11,100 personal tax allowance that cannot be used for dividends and also the new £500/£1000 interest tax free. If I am going to have a balanced set of investments it make sense to have enough interest paying investments outside an ISA to cover the personal tax allowance (not sure if it is £11,100 + £500/£1000 yet) and to keep the ISA for equities. As I sell equities outside of the ISA to use up CGT allowance I reinvest in cash investments and ISAs and as each cash ISA reaches the end of it fixed rate term I will be reinvesting in equities within an ISA. Seems to be the best strategy for me at present at least until the tax rules are changed again.
I guess the point I am making is that unless you finances are simple P2P ISA may not be the best option and most of RS probably have more complicated finances than the average ISA investor.
Stevio, as you say it is the CGT which is the greatest saving but the new dividend tax does help to make ISAs more attractive for equities.
The reason I have large amounts of dividend is that I kept money in my companies for rainy days, average out my income when I was not working and to avoid the higher tax band when I was working. This money is best paid out in dividends as there is only small amount of taxable profit to be covered by salary and I have already paid corporation tax on the money earned. I know a number of people of similar age with Ltds who have done the same so it may not be so unusual. I already had a large equity investments but as rates in saving accounts decreased I moved a lot of my cash into equities to gain better returns but of course these come as CG and dividends.
If you don’t have a regular job and are not taking your pension there is the £11,100 personal tax allowance that cannot be used for dividends and also the new £500/£1000 interest tax free. If I am going to have a balanced set of investments it make sense to have enough interest paying investments outside an ISA to cover the personal tax allowance (not sure if it is £11,100 + £500/£1000 yet) and to keep the ISA for equities. As I sell equities outside of the ISA to use up CGT allowance I reinvest in cash investments and ISAs and as each cash ISA reaches the end of it fixed rate term I will be reinvesting in equities within an ISA. Seems to be the best strategy for me at present at least until the tax rules are changed again.
I guess the point I am making is that unless you finances are simple P2P ISA may not be the best option and most of RS probably have more complicated finances than the average ISA investor.