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    Rather than draw money from my pension would it be better to take dividends as income into my ISA and then withdraw cash periodically?

    09 February 2022

    Question by Ed

    Hi, usually I take and re-invest dividends in my Stocks & Shares ISA. Rather than draw money from my pension would it be better to take these dividends as income into my ISA and then withdraw cash periodically? Would this be subject to tax on withdrawal?

    Answered by Adam Holt

    Hello Ed,

    I can’t comment on whether it’s better for you to take income from your Stocks & Shares ISA or from your pension as I don’t know your personal tax position. However, I can confirm that if you are to take the dividend income from your ISA holdings as a withdrawal then this will be free from any income tax.

    ISAs are a highly effective tax efficient investment vehicle. Any holdings within your Stocks & Shares ISA will grow free from any capital gains, and the dividends/interest that they produce will be free from any dividend/interest tax. Whether you cash in the dividend income or sell down any of the existing capital as a withdrawal it will still be tax free.

    Adam

    Answered by

    Adam Holt

    Independent Financial Adviser

    I’m an Independent Financial Adviser who splits time between my office in London and working from home in Kent.

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    Boring Money Ltd is a limited company registered in England and Wales under registration number 09459832 and we have our registered office at 10 Lower Thames Street, London, England, EC3R 6AF.
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