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How dividends are taxed in a Stocks & Shares ISA
In 2004 the 10% dividend tax credit within ISAs was abolished.

This means if you are a basic rate taxpayer there is no advantage to holding shares in an ISA as you would pay the same 10% tax (on dividends) if the shares were held outside the ISA wrapper.

But for higher rate taxpayers there is an advantage as shares held outside of an ISA pay tax at 32.5% on the dividend income versus 10% if the shares are within the ISA wrapper.
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