Do I pay tax on any withdrawals from my ISA?

Q: If I withdraw money from a Stocks and Shares ISA, do I have to pay tax on the amount received?

A: One of the main advantages of Stocks and Shares ISAs and Cash ISAs is that there is no tax to pay at all on withdrawals. Regardless of whether you make regular withdrawals (perhaps to top up a state pension payment) or take a larger one-off lump sum, there is no income tax or capital gains tax to pay.

What’s more, you don’t have to declare these withdrawals on a self-assessment tax return, in the same way that you would have to declare rental income, for example, or the interest received on savings accounts. This certainly will be an advantage for those who dread paperwork and form-filling.

While they are highly tax-efficient, Stocks and Shares ISAs are not completely tax-free. It’s worth remembering that you don’t get tax relief on contributions (as you would with pension contributions). And when you die, the value of any remaining ISA will be included as part of your estate for inheritance tax purposes.

Open a Fidelity Stocks and Shares ISA

• Read: Cash ISAs versus Stocks and Shares ISAs: the basics
• Read: How might the government change Cash ISAs?
• Read: How to make cash-like returns - without a Cash ISA

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Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Eligibility to invest in an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.