How to profit from stocks and shares ISAS in 2022

The stock market is expected to continue an upwards direction in 2022. No doubt that 2022 is going to be an exciting year for investment opportunities and to make the decision to put your money to work into growing your wealth.

Even if you already have an account, or if you’re starting and trying to understand what’s the best option for you, a stocks and shares ISA account is something that should not be overlooked. Offering attractive benefits and unique options to maximize your gains, ISA accounts are becoming more and more popular among investors. But, how do you profit from stocks and shares ISAS in 2022?

What is a stocks and shares ISA?

Stocks and shares ISAS accounts have become a very popular option for those interested in investing their money in stocks and ensuring the best possible earnings. But, why is this type of account such a good option for investors, big and small, new and old?

Well, a stocks and shares ISA account is exempt from UK capital gains or dividends income tax, as well as taxes on interest in bonds and coupons accrued.

The importance of this type of account goes beyond the simple fact that not paying taxes on your gaining is obviously a way of keeping more of the money you put to work. In fact, taxes rules and benefits may change, and depending on your circumstances, you could get less money than what you put in.

Brokers that offer stocks and shares ISA accounts offer a variety of other features as well, like a trading platform, a diversity of assets to invest in, and even very low or inexistent commissions.

Who can open a stocks and shares ISA account?

Stocks and shares ISA accounts are available to all UK residents over 18 years of age. An eligible person is only able to have one stocks and shares ISA account (cannot use multiple brokers and multiple ISA accounts).

How to profit from stocks and shares ISAs?

If you are considering getting started with the Stock Market, investing your money in shares (and if you don’t have any money on stocks, you probably should), there is one aspect that tends to get overlooked but remains vital to make sure you make money. No, it’s not a particular index or study, some crazy insider tip, or a secret tip to know when a stock is going to make you rich. It’s taxes.

Most normal accounts are subject to taxation, and between that and commissions and fees, a big part of what you may be making in the stock market, gets lost. That is when a stocks and shares ISA accounts become a vital tool to make sure your earnings are indeed yours.

There is, however, a limit on how much money can be invested using a stocks and shares ISA account. But anything up to £20,000 is not subject to taxes (this is a limit per year and cannot be carried out to the following year). Not a bad number to start, especially considering that smart investments can multiply that considerably.

So, in a nutshell, your stocks and shares ISA account allows you to invest without having to worry about the following:

•           No income tax on your profit

•           No capital gain tax

•           No need to declare your earnings in your tax return

•           No tax on dividends payment

What does this mean in reality? Well, you can save quite a bit of money. With a normal account, any amount over £12,300 in profit will be taxed as capital gains, if you earn more than £2,000 in dividends you will be taxed (anything between 8 and almost 40%), all that without counting income tax, which may be significant as well.

Looking at these numbers, we understand clearly the benefits of a stocks and shares isas account in its ability to help us save money that otherwise would just be gone.

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