ISA dividend taxation

[larrydavid12]

Hello,

Does dividend income inside an ISA stock and shares wrapper count towards the £31,865 personal dividends allowance?

I take a yearly dividend of £31,865 from my limited company with the 10% tax credit rate. If I receive additional dividend income from stocks within an ISA would I then pay 32.5% on those dividends?

I asked my accountant this and this is what she replied:

"Any UK dividend income would be taxed at the same rate, so if you were to take £7,956 salary plus £30,518.10 net dividends from your Ltd company this tax year, ordinarily this would not incur any tax, however if you were then to earn £100 dividend income from your shares, you would then have some higher rate dividend income which would be taxed at 25% (the actual tax rate would be 32.5% on the gross dividend but after the tax credit is deducted the charge on the net dividend would be 25%)."

If that's the case what's the point of having stocks in an ISA?

[AvocadoK]

Hello
You are quite right. Dividends from stocks & shares in an ISA are exempt.
If I were you, I would ask the accountant again, stressing that the shares are in an ISA. If they give the same answer, it is time to change accountants!
AK