How do I avoid paying tax on UK stocks and shares?
Hi everyone,
I'm pretty new to investing and have been reading about ways to reduce tax on my investments. I've opened a trading account with Trading212 and bought some UK shares, but I'm worried about having to pay tax on any profits I make.
I've heard people mention ISAs but I'm not sure how they work. Is it worth moving my shares into an ISA? Also, someone mentioned something about a capital gains allowance but I'm not sure how that works either.
Currently only have about £3k invested but planning to add more over time. Just want to make sure I'm doing things in the most tax-efficient way possible! Thanks!
1 Answer
Hello,
Yes, using a Stocks & Shares ISA is a great move — any gains or dividends inside the ISA are completely tax-free, no matter how much your investments grow.
Outside an ISA, you get a £3,000 capital gains allowance (used to be £12k a few years ago), so if your profits go over that in a tax year, you'd owe tax. Same with dividends — there's a small tax-free allowance, then you're taxed based on your income.
Since you’re just getting started, now’s a perfect time to move future investments into an ISA — just make sure you buy the shares inside the ISA, you can’t transfer existing ones directly from a standard Trading212 account.
Hope that helps, and good luck building your portfolio!