One way our clients balance their portfolio while experiencing the highs and lows of the equities market is through a stocks and shares ISA.
An ISA is a wrapper, allowing you to hold multiple investments within the one account. For example: you could hold a European fund along with a UK bank fund and a US growth fund. Compared to other accounts, the tax advantages of an ISA are substantial. No capital gains, income or dividend tax are levied on amounts invested through an ISA, and withdrawals can be made at any time without penalty.
There is no limit on the number of ISAs you can own although the HMRC restricts tax-free investments to £20,000 per year (tax year 2020/2021). But the £20k limit is a use it or lose it, there is no ability to back date or contribution. These figures are for individual investors, couples can take the benefit of £40,000 of contributions in a year.
Two things to consider here:
The value of units can fall as well as rise, and you may not get back all your original investment.
The tax treatment is dependent on individual circumstances and may be subject to change in future.
