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Stocks & Shares ISA
db09striker
Posted: 04 March 2017 17:54:36(UTC)
#1

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Hi,

I have a question about the stocks and shares ISA which relates to the limit. Currently this is £15,240 which you can invest tax free....

Say someone invests the full £15,240 into one stock, their stock does well, they decide to sell the stock, they now have £18,740 in their ISA account. This is now over the limit, does this person have to now withdraw the profit they have made from their ISA?.....

or

Does this person have the option to reinvest the whole £18,740 tax free?

So essentially you can reinvest your profits as much as you like totally tax free?


If this is the case - what happens at the end of a tax year and you have to renew your ISA. Say you finish this tax year with £32,000 in your ISA....can you transfer that £30,000 and continue investing it tax free? or do you have to start a new tax year from the new tax limit again?

Thanks for your help.
CUEBALL
Posted: 05 March 2017 13:17:58(UTC)
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It all compounds completly tax free and every year you can add more...great isn't it? however if you dont use the full allowance in a tax year any tax benefit of the shortfall is lost. Simillarly if you withdraw funds any tax benefit is lost and cannot be replaced at a later date.Isa's replaced PEP'S a few years back ...there are now many PEP/ISA millionaire's ...which is nice..all that money completely free of tax when withdrawn ..which is also nice....I like the fact that there is no 'fannying around' (involvment with HMRC)...again ..nice.
6 users thanked CUEBALL for this post.
db09striker on 05/03/2017(UTC), Keith Cobby on 05/03/2017(UTC), Tony Peterson on 05/03/2017(UTC), john_r on 05/03/2017(UTC), Jon Snow on 05/03/2017(UTC), Dan Mall on 07/03/2017(UTC)
db09striker
Posted: 05 March 2017 15:51:35(UTC)
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CUEBALL;44127 wrote:
It all compounds completly tax free and every year you can add more...great isn't it? however if you dont use the full allowance in a tax year any tax benefit of the shortfall is lost. Simillarly if you withdraw funds any tax benefit is lost and cannot be replaced at a later date.Isa's replaced PEP'S a few years back ...there are now many PEP/ISA millionaire's ...which is nice..all that money completely free of tax when withdrawn ..which is also nice....I like the fact that there is no 'fannying around' (involvment with HMRC)...again ..nice.



Cheers Cueball.

What happens at the end of this tax year. I have an ISA, but will I need to open another one for the new tax year and transfer funds?
Sara G
Posted: 05 March 2017 16:04:43(UTC)
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You don't need to open a new ISA each year, assuming you're happy to stay with the same provider (although you are free to do so if you want to hold multiple ISAs with different providers). If you have set up regular monthly contributions these will continue until you stop them. The key thing is that you can't contribute to more than one S&S ISA per year.
2 users thanked Sara G for this post.
Tony Peterson on 05/03/2017(UTC), db09striker on 05/03/2017(UTC)
andy mac
Posted: 05 March 2017 17:15:19(UTC)
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I have ISAs with HL, Fundsmith, and I Web

I will be opening another Iweb for the boss come April
I use in general the Iweb ISAs to trade in as the fees are low ( at the moment)
The HL ISAs hold mainly ITs with a few utility shares and funds ( again because of charges), there is little tradind but I find their research etc good., and fundsmith because at the moment it makes money
I have yet to find a good low cost fund ISA platform any suggestions?
Tony Peterson
Posted: 05 March 2017 18:26:01(UTC)
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For as long as they last, the self invested stocks and shares ISA is evolution's gift to the UK investor.

I trade the gains in mine regularly and my ISA grows much faster than my LTBH certificated holdings.

For anyone who hasn't used up their full allowance for the current tax year, stop sitting on cash and get your brain into gear. Now. Right now. Don't wait for the budget.

1 user thanked Tony Peterson for this post.
CUEBALL on 05/03/2017(UTC)
db09striker
Posted: 05 March 2017 19:10:09(UTC)
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I have to confess.....I opened 2 Stocks & Shares ISA's this tax year.

I opened 1 with one broker, put £5000 in the account and then I decided I wanted to invest in Australian stocks and that broker didn't offer these, so I closed my ISA and opened another one with a different broker.

I assume the 1 stocks and shares ISA rule is in place so that people don't go over the ISA limit.

I have not gone over the ISA limit. I have made sure I haven't, so I have not benefitted from having extra funds beyond the £15,240 limit.

I put £5000 in the S&S account I closed, I have a help to buy ISA with a few thousand in it, and I have put around £6000 in my current S&S ISA.


I doubt I'll hear anything from HMRC about it, but who knows.

Or am I going to prison for 5 years?
Tony Peterson
Posted: 05 March 2017 19:14:46(UTC)
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Relax

It is not the number of providers you use but the amount you put in.

You are not going to prison.
1 user thanked Tony Peterson for this post.
Bruce J. on 05/03/2017(UTC)
Tony Peterson
Posted: 05 March 2017 19:25:21(UTC)
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While I am at it, I have to say that the OP's worries are probably widely felt but rarely shared on these forums.

So my advice to all who can afford it is to use your full ISA allowance into self select s&s ISAs as soon as possible into each tax year, and, barring extreme emergencies, regard that as your most untouchable investment. Dividends arising in ISAs should be reinvested within the ISA tax shelter, into whatever stock seems the best bargain on the day that dividends appear.

I am still a little gobsmacked at the rate our ISAs grow - so much that the financial "professionals" have to accuse me of lying even if I only them give an underestimate of our growth rate.

1 user thanked Tony Peterson for this post.
Mr Helpful on 06/03/2017(UTC)
Bruce J.
Posted: 05 March 2017 19:26:52(UTC)
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For me the challenge is to get the maximum out of the tax advantage - so I try to choose carefully what goes into the ISA and what stays in my normal investment account.

India Capital Growth, for example would not be in my ISA because it doesnt pay dividend - so there is little benefit. However just after the Brexit vote I spent heavily on Legal & General - and they are in the ISA, because at the price I bought I am getting good yield and good capital appreciation - all tax free.

I just wish I had been able to put Melrose in there, what an excellent investment that was, and all thanks to the lovely people who frequent these forums.

As I understand it the ISA limit goes up to £20K this year which is excellent news.
Tony Peterson
Posted: 05 March 2017 19:50:42(UTC)
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Bruce J

Haven't you ever thought of becoming your own fund manager, at least within the ISA shelter? It has been stunningly more efficient for us.
Sara G
Posted: 05 March 2017 19:53:25(UTC)
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db09striker;44163 wrote:
I have to confess.....I opened 2 Stocks & Shares ISA's this tax year.

I opened 1 with one broker, put £5000 in the account and then I decided I wanted to invest in Australian stocks and that broker didn't offer these, so I closed my ISA and opened another one with a different broker.

I assume the 1 stocks and shares ISA rule is in place so that people don't go over the ISA limit.

I have not gone over the ISA limit. I have made sure I haven't, so I have not benefitted from having extra funds beyond the £15,240 limit.

I put £5000 in the S&S account I closed, I have a help to buy ISA with a few thousand in it, and I have put around £6000 in my current S&S ISA.


I doubt I'll hear anything from HMRC about it, but who knows.

Or am I going to prison for 5 years?


My understanding is that you can only contribute to one ISA per tax year (regardless of whether you stick to the overall limit). If you contributed to the original ISA before starting afresh with the second broker in the same year, then that's against the rules. But if not then that's fine. Also, if you transferred between providers that's fine, as it is the same ISA. (NB It's always better to transfer rather than close an ISA to retain the tax benefits.)
db09striker
Posted: 05 March 2017 20:10:56(UTC)
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Joined: 04/03/2017(UTC)
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Sara G;44168 wrote:
My understanding is that you can only contribute to one ISA per tax year (regardless of whether you stick to the overall limit). If you contributed to the original ISA before starting afresh with the second broker in the same year, then that's against the rules. But if not then that's fine. Also, if you transferred between providers that's fine, as it is the same ISA. (NB It's always better to transfer rather than close an ISA to retain the tax benefits.)


From a quick browse on google, what I've done doesn't seem to be an issue.

I am not sure why it's a rule really. As long as you're not benefitting from investing more than the limit - I don't see why it would be an issue. But would be happy to be told why it's an issue and what the consequences are.
db09striker
Posted: 05 March 2017 20:26:31(UTC)
#13

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Tony Peterson;44165 wrote:
While I am at it, I have to say that the OP's worries are probably widely felt but rarely shared on these forums.

So my advice to all who can afford it is to use your full ISA allowance into self select s&s ISAs as soon as possible into each tax year, and, barring extreme emergencies, regard that as your most untouchable investment. Dividends arising in ISAs should be reinvested within the ISA tax shelter, into whatever stock seems the best bargain on the day that dividends appear.

I am still a little gobsmacked at the rate our ISAs grow - so much that the financial "professionals" have to accuse me of lying even if I only them give an underestimate of our growth rate.




Yes - I should maybe have got into a Stocks and Shares ISA a while ago.

I have hefty savings. My aim was to purchase a property, currently aged 32, but cannot afford it. House prices going up on average £15,000 per year for the past 4+ years has killed my chances of getting on the property ladder. I don't know who can keep up and save £15,000+ a year to keep up with the price increases.

That has led me to stocks. And I am having to go to the riskier stocks as I need a hell of a lot more money to get me a property.

I have £70,000. I can't get a property as 1. I'm single, 2. I live in one of the wealthier ares of the UK. 3. There are no affordable houses being built here. A 1 bed modest apartment here costs £200,000+. How I am ever going to be able to afford a family home - I don't know. I'd have to move a long way to be able to do so....

So for 1 year I am going to invest in 'risky' stocks. Investing no more than £20,000 and seeing where it takes me, could be good, could be bad, could be average.

My aim is to start with a couple of £2000 investments into stocks which are tipped to multiply within a year. As soon as I have made a profit of £5000, that will then be invested again, as soon as that turns to £25,000, I invest it again and so on until I have at least £200,000.

Yes I sound mad, but I am at least going to give it a go. May take a few years overall, but worth a try.

There are stocks out there that I have seen tipped by others who tell you it's going to rise and by how much and it does. I have found reliable sources, so I'll see where their advice takes me.

This is what it takes to get on the property ladder.

Making 25% a year isn't going to help me. Making 100% a year isn't going to help me, I will always be behind house prices.....I need a boost somehow.

Raj K
Posted: 05 March 2017 20:29:09(UTC)
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db09striker;44170 wrote:
Sara G;44168 wrote:
My understanding is that you can only contribute to one ISA per tax year (regardless of whether you stick to the overall limit). If you contributed to the original ISA before starting afresh with the second broker in the same year, then that's against the rules. But if not then that's fine. Also, if you transferred between providers that's fine, as it is the same ISA. (NB It's always better to transfer rather than close an ISA to retain the tax benefits.)


From a quick browse on google, what I've done doesn't seem to be an issue.

I am not sure why it's a rule really. As long as you're not benefitting from investing more than the limit - I don't see why it would be an issue. But would be happy to be told why it's an issue and what the consequences are.


I always thought that you could only subscribe to one cash isa and one stocks and shares isa per year. Probably has to do with being more complex for the platforms to monitor and report if someone chose to for example open ten stocks and shares isa accounts within the same year. How would they all liaise with each other to make sure the subscriber has not gone above the limit for that tax year!
Sara G
Posted: 05 March 2017 20:39:49(UTC)
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Yes that's correct - this explains it pretty well:

https://www.moneyadvices.../stocks-and-shares-isas

I think the confusion arises because you can pay into more than one ISA (say a Cash ISA and a S&S ISA) but only one S&S ISA.

I wish they would relax the rules - it would be much easier to manage.
Sara G
Posted: 05 March 2017 20:48:13(UTC)
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db09striker;44171 wrote:
Tony Peterson;44165 wrote:
While I am at it, I have to say that the OP's worries are probably widely felt but rarely shared on these forums.

So my advice to all who can afford it is to use your full ISA allowance into self select s&s ISAs as soon as possible into each tax year, and, barring extreme emergencies, regard that as your most untouchable investment. Dividends arising in ISAs should be reinvested within the ISA tax shelter, into whatever stock seems the best bargain on the day that dividends appear.

I am still a little gobsmacked at the rate our ISAs grow - so much that the financial "professionals" have to accuse me of lying even if I only them give an underestimate of our growth rate.




Yes - I should maybe have got into a Stocks and Shares ISA a while ago.

I have hefty savings. My aim was to purchase a property, currently aged 32, but cannot afford it. House prices going up on average £15,000 per year for the past 4+ years has killed my chances of getting on the property ladder. I don't know who can keep up and save £15,000+ a year to keep up with the price increases.

That has led me to stocks. And I am having to go to the riskier stocks as I need a hell of a lot more money to get me a property.

I have £70,000. I can't get a property as 1. I'm single, 2. I live in one of the wealthier ares of the UK. 3. There are no affordable houses being built here. A 1 bed modest apartment here costs £200,000+. How I am ever going to be able to afford a family home - I don't know. I'd have to move a long way to be able to do so....

So for 1 year I am going to invest in 'risky' stocks. Investing no more than £20,000 and seeing where it takes me, could be good, could be bad, could be average.

My aim is to start with a couple of £2000 investments into stocks which are tipped to multiply within a year. As soon as I have made a profit of £5000, that will then be invested again, as soon as that turns to £25,000, I invest it again and so on until I have at least £200,000.

Yes I sound mad, but I am at least going to give it a go. May take a few years overall, but worth a try.

There are stocks out there that I have seen tipped by others who tell you it's going to rise and by how much and it does. I have found reliable sources, so I'll see where their advice takes me.

This is what it takes to get on the property ladder.

Making 25% a year isn't going to help me. Making 100% a year isn't going to help me, I will always be behind house prices.....I need a boost somehow.



I can understand your situation and sympathise. When I was saving for a property, prices weren't as high and interest rates were approaching double digits. Many observers believe that it is actually low interest rates that have helped pushed house prices up rather than (solely) a shortage of houses being built, and if so, then it's a cruel consequence of the manipulations of central bankers in recent years.

Please be careful though... read and learn as much as you can before risking any money.

Best of luck
Raj K
Posted: 05 March 2017 21:13:33(UTC)
#24

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I would suggest that as you are under 40 you also contribute to the new LISA each year which is set to go live in April. As i understand you will be able to put £4000 into the LISA wrapper and the government will top it up by a further 25%. That can be invested in any stocks and shares of your choice. There are some rules in that it can only be used to purchase your first house or when you reach over 60/65 as a pension. Withdrawal before or for any other reason means you forfeit the government contributions. I suggest you look on money saving expert website for the exact rules.

Also i believe you can invest the further £16000 (£20000 - £4000 in the LISA) of the allowance in a normal stocks and shares ISA wrapper.

Someone please correct me if i am wrong!

I would say invest in some good quality core funds and then branch out as you know more!



1 user thanked Raj K for this post.
jvl on 07/03/2017(UTC)
db09striker
Posted: 05 March 2017 21:18:49(UTC)
#15

Joined: 04/03/2017(UTC)
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Sara G;44174 wrote:
Please be careful though... read and learn as much as you can before risking any money.

Best of luck



Thanks. If I lose money, I lose money. I have come to a crossroads in which buying a house is out of the question, and if it's out of the question now - it'll likely be out of the question for me forever.

I have more than enough money to fall back on. I am more than enough in a good position financially to take some bigger risks.

Maybe naively, I don't believe the so called 'riskier' stocks are in fact that risky, they are risky compared to your blue chip companies.

You don't lose money until you sell for less than you paid or that company goes out of business. I'll be unlucky if I pick a stock and then that company goes out of business.

There are many opportunities in these riskier stocks. It's one of the only ways in this world you can make yourself very rich. I've played the lottery - hasn't worked for me. Time for stocks.

I am prepared to risk money which others wouldn't and in places others wouldn't. People are very scared of losing money, and the general public wouldn't even consider the stocks I'm considering. People stick with what they know, the blue chip companies. There is a much bigger world out there in stocks.

I will pick carefully, and take advice from people with a proven track record of selecting multi-bag stocks.
andy mac
Posted: 05 March 2017 21:42:20(UTC)
#26

Joined: 12/02/2016(UTC)
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We hear what you say and if you are not averse to risk then as Del Boy used to say who dares wins , next year we will be millionaires Rodney.
Have you heard the phrase rising tides lift all ships.
Would you be happy to drop 20% the day after you invest all your money

Just remember lots have tried and few have succeeded but we wish you well and do come back and tell us but as someone else said keep learning
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