Retirement Could Be Sweeter When Stocks And Shares ISAs Back-up The Pension Pot

Possibly the only thing sweeter than fruits or fizzy drinks is the tax rules applicable to stocks and shares ISAs.

They were introduced together with the cash ISA which unlike the stocks and shares ISA received widespread media attention for the tax free savings it offered. The stocks and shares ISA is sweet because it has some rather wonderful UK tax rules.

Dividends are not subject to additional tax

Capital Gains are not taxed

Bonds interest is not taxed

Income, capital gains, or trades are not considered taxable income so they do not have to be reported to HMRC.

Stocks and Shares ISAs are particularly sweet to those facing retirement with incomes around •£22,900 level, as they do not affect personal allowances as other systems do. This possibly nudges them past grapes in the sweetness level.

So, if a person has a pension pot which is as stable as a celebrity marriage, then a few quid tucked away in a stocks and shares ISA is not be a bad thing. You could say it is a prenuptial agreement in case the pension hits the rocks together with the stock market. It should be noted however, that the stocks and shares ISA like the name suggests is dependant on stock market performance like most pensions. Nonetheless, if used well they can make the pension crisis seem more like a heavy drama.

Stocks and shares ISAs give plenty of benefits which by and large offset some of the risks of investment. They are an investment vehicle which supports a pension scheme without impeding it at least up to a point and through investing in both the stocks and shares ISA and the pension, the money is spread around which always lessens a risk.

Many investors turn to banks and financial advisors to get advice on where to invest their money and this makes sense on the surface. It is important to realise that many financial decisions are common sense ones, and do not need a highly paid professional telling you what to do with your financial investments, anymore than you need them to tell you how to flush the chain. The better financial management companies have acknowledged this and subsequently take a hands off approach and step in only when needed.

For stocks and shares ISA investments, this is the kind of company you need.

Richard Teahon’s Profile

In : Investing

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