Ndubuisi Egwim explains how ISAs shelter capital gains from tax. Invest £10,000 that grows to £25,000 and you owe tax on the £15,000 gain outside an ISA, but nothing inside one. Lifetime ISAs offer a £1,000 government bonus, but come with hidden traps most people miss.
£15,000
£1,000 government bonus
In fact, I'll give you a simple example. If you invested at £10,000 and it grows to 25,000, outside on ISA, you may owe tax on the 15k capital gains, but inside an ISA, you owe nothing. This is why I see the stock and shares ISA as one of the gateways to tax efficient investing. I mean, for professionals with, let's say, long term horizons, you've got a stable income and high tax rates. This is one of the most powerful tools available. I mean, there are others as well, but it's not risk free. Markets go up and they go down. So this is not for short term money. Number three, the lifetime isa, Lisa, it's powerful, but it's full of traps. Let's talk about the one everyone hears about. Lifetime ISA is where you get that free £1,000 government bonus. That's where you get it.
