Stocks and Shares ISA question

[PowerthruIT]

Hi all,

Back with a query around investing in a stocks and shares ISA.

So let's say I open one today and start investing in a global index fund, and in 10 years that investment is worth 50,000 (unlikely, I know but just a scenario).

If I then want to sell that investment and draw down the 50k can I do that in one hit or would that breach the 20k ISA limit per financial year as this would effectively be money coming into my ISA?

Any advice appreciated as always!

The limit is how much you can pay in to the ISA in one tax year, not the the gains you make.

The global index fund is within the wrapper of the ISA, so doesn't matter what the value of it is when you "cash in" it is still within ISA.

The money is already in the ISA, just in a global fund, in the ISA.

You can transfer your S&S ISA to a cash ISA and draw down from that. That way any interest you continue to earn, while you draw down, is tax-free.

Edit - ‘transferring’ means you are not withdrawing and re-investing back into an ISA and using up that tax year’s ISA limits

Most S&S ISAs have a money market option or pay interest on cash balances so you don't necessarily even need to transfer to a cash one

But PP are right - it's all already in the ISA, so the £20k limit is irrelevant.

You dont 'draw down ' on an ISA in that way you do with a pension. You just take money out as and when you want - no 25% rules or crystalisation, or anything like that. Sales and purchases within the wrapper are unrestricted, and withdrawals from the wrapper are unrestricted. The only limit is on new cash being paid in.

That's good news thanks appreciate the info

Thanks all for the info - so now my investment journey begins!

Thats the great things about a stocks and shares ISA as long as you dont exceed paying 20k in to isas in a tax year the money is always tax free. If you keep it for 30 years and you strike big and its worth a million its still tax free however you use it or withdraw it

But remember you've already paid income tax on your ISA contributions - it's only the gains that are tax-free. Whereas with a pension your contributions are tax-free but it gets taxed when you withdraw it (after the 25% tax-free lump sum you can take - now that bit really is tax-free!).

Im simply answering the other person on there question the fact that whats in that ISA will remain tax free. The other persons money to invest in the ISA could come from anywhere, earnings, savings, inheritance who knows. Fact is put 20k in that ISA whatever its worth in the future the answer to that question is no you wont pay tax.

Now your point re pensions v isas etc is a whole other topic and very much dependent on a person's situation. For example for some a pension could be a better return more tax effective option but if they need the money in there mid 50s or may need access to it at some point the s&s ISA may be better. However that is down the road where someone should get some proper financial advice

Whereas with a pension your contributions are tax-free but it gets taxed when you withdraw it (after the 25% tax-free lump sum you can take - now that bit really is tax-free!).

Not just that - money inside a pension pot grows tax-free. You get taxed when you take it out, but until then you pay zero tax on capital gains and dividends.