The best tax break in the UK is the ISA tax-free savings regime. Each UK tax-resident adult can put £20k per year into an ISA account – use it for a wide range of investing activities – and not even have to report on what happens in those accounts, let alone pay tax on them.
This tax break is not exactly mass-market – not many people have £20k of spare funds every year – but for those of us who can avail of it, it is potentially enormous. Kids can have ISAs too, with an annual allowance of £9k. So a family of four, that can find £58k of liquid funds every year, can rapidly shelter a very large sum.
If you are a dual citizen, especially if you are a US citizen / green card holder, then Uncle Sam is certainly going to want to hear about these accounts and is absolutely going to tax them, but for plain UK citizens 100% resident in the UK, these tax breaks are awesome.
I’m now one of thousands of ISA millionaires
ISAs have now been around long enough that the number of investors whose ISA accounts exceed £1m is reaching many thousand. Expect to see this number skyrocket in the next few years. The top 25 largest ISAs average £11.66m of pot each – with I imagine a healthy dose of NVidia / similar holdings. If you haven’t followed the story of (Lord) John Lee, who is one of the first UK investors to amass £1m in ISA accounts, he’s worth checking out (£paywall).
My aim is to see my ISA accounts grow to well beyond £10m – which if I live another three or four decades, and the current policies don’t change, appears achievable.
Continue reading “From ISA $millionaire to £millionaire”
FIRE v London 