Mar 11, 2021 2 min read

3 advantages of a stocks and shares ISA

Here are three-plus points about a stocks and shares ISA.
3 advantages of a stocks and shares ISA
Stock & Shares ISA Advantages

Using a stocks and shares ISA to invest in the UK stock market has been a popular strategy over the years. Among the advantages of an ISA are its tax efficiency, flexibility and low costs compared to other forms of investment account.

Tax efficiency of a stocks and shares ISA

A stocks and shares ISA could be a more tax-efficient means of investing in the UK stock market compared to a sharedealing account. There is no income tax, capital gains tax or dividend tax to pay on amounts invested through an ISA.

This is in contrast to a sharedealing account, where an investor is liable to pay such taxes after their annual allowances have been used up. Over time, this could lead to higher net returns from investing in shares via an ISA that ultimately produces a larger lump sum for retirement.

Of course, tax laws can change. Therefore, there is never any guarantee that a stocks and shares ISA will offer the chance to earn returns that are higher on a net basis than a sharedealing account. However, for now, an ISA seems to be a means of potentially reducing a tax bill.

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