Allowance - Help To Buy ISA and Shares ISA

neilem
neilem Posts: 103 Forumite
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in ISAs & tax-free savings
I know the Cash ISA affects the allowance for the Shares ISA, but does the Help To Buy (HTB) ISA?

For example, if I have added £1600 into HTB ISA this tax year, do I still get the full £20k allowance for the Shares ISA, if I haven’t added anything to any other ISA (e.g. Cash ISA)?

Comments

  • eskbanker
    eskbanker Posts: 30,939 Forumite
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    No, the total annual allowance across all types of ISA is £20K, so if you've paid £1,600 into a HTB ISA this tax year then you can pay £18,400 into a S&S ISA if you haven't paid into any other ISAs.

    Is your question entirely hypothetical? It would be unusual for someone trying to build up a first-time property deposit to have a spare £20K sloshing around and in those circumstances few would recommend investing it in S&S....
  • neilem
    neilem Posts: 103 Forumite
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    eskbanker wrote: »
    No, the total annual allowance across all types of ISA is £20K, so if you've paid £1,600 into a HTB ISA this tax year then you can pay £18,400 into a S&S ISA if you haven't paid into any other ISAs.

    Is your question entirely hypothetical? It would be unusual for someone trying to build up a first-time property deposit to have a spare £20K sloshing around and in those circumstances few would recommend investing it in S&S....

    Thanks. I’m curious why you’d advise against this? 25% return from a HTB, also get to add shares which will be tax-free... yes it could go down, but the past few years you’d have been making a better return doing that than leaving money in the bank collecting a mere 1-2% per year.
  • eskbanker
    eskbanker Posts: 30,939 Forumite
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    Definitely worth claiming 25% from HTB so that's a no-brainer, although LISA may be a better bet given its higher annual contribution limit, provided you're not buying within the next 12 months.

    However, putting money into stocks and shares is typically suited to long-term investing, for 7-10 years or more, so is usually incompatible with saving for a deposit unless you're not planning on buying for a long time. Yes, returns have been impressive in recent years, but abnormally so in the context of a sustained bull run, and it would be foolish to expect this to continue indefinitely without significant corrections and crashes from time to time. It's not an issue if you have time to ride out such downturns but few first-time buyers would have that luxury, and to be honest if you already had £20K+ then it would probably make more sense to buy sooner rather than later.
  • neilem
    neilem Posts: 103 Forumite
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    eskbanker wrote: »
    Definitely worth claiming 25% from HTB so that's a no-brainer, although LISA may be a better bet given its higher annual contribution limit, provided you're not buying within the next 12 months.
    LISA is good, but the one year thing put me off. I don’t know when I will find thee house, could be anytime. HTB was more flexible in that regard.
    eskbanker wrote: »
    However, putting money into stocks and shares is typically suited to long-term investing, for 7-10 years or more, so is usually incompatible with saving for a deposit unless you're not planning on buying for a long time. Yes, returns have been impressive in recent years, but abnormally so in the context of a sustained bull run, and it would be foolish to expect this to continue indefinitely without significant corrections and crashes from time to time. It's not an issue if you have time to ride out such downturns but few first-time buyers would have that luxury, and to be honest if you already had £20K+ then it would probably make more sense to buy sooner rather than later.
    I’d have to respectfully disagree with this. Unless there is something I’m missing, then you can put your money in any stocks... even perhaps miners (or the like) to mitigate any crash downturn (if you want to be that defensive of course). With all the QE funny money pumped into the system, it has totally skewed it all so it’s difficult to tell if a crash is around the corner or not.

    My main point is though, percentage gains from the stock market are quite substantial, even short term for some, albeit, riskier stocks out there. Just need to do your homework to find the gems.

    Not sure why buying a house is a good idea before a crash occurs though?

    Can Gold ETF funds be bought using the S&S ISA?
  • Alexland
    Alexland Posts: 9,653 Forumite
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    edited 23 February 2018 at 9:16PM
    neilem wrote: »
    I!!!8217;d have to respectfully disagree with this. Unless there is something I!!!8217;m missing, then you can put your money in any stocks... even perhaps miners (or the like) to mitigate any crash downturn (if you want to be that defensive of course). With all the QE funny money pumped into the system, it has totally skewed it all so it!!!8217;s difficult to tell if a crash is around the corner or not.

    My main point is though, percentage gains from the stock market are quite substantial, even short term for some, albeit, riskier stocks out there. Just need to do your homework to find the gems.

    Not sure why buying a house is a good idea before a crash occurs though?

    Can Gold ETF funds be bought using the S&S ISA?

    Yes you can buy Gold ETFs in an ISA wrapper however sometimes cautious portfolios suffer bigger drops than adventurous portfolios and sometimes all asset types go down at once so the best way to improve you chances of a positive outcome is from having a long term investment outlook where you can ride out the ups and downs.

    However short term investing is ok if you are comfortable with the risk that you crystalise a loss at the point of withdrawal - basically a bit of a gamble.

    Alex.
  • eskbanker
    eskbanker Posts: 30,939 Forumite
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    neilem wrote: »
    Not sure why buying a house is a good idea before a crash occurs though?
    I wasn't meaning buying a house before a crash specifically, the point I was making is that a property is in itself an investment, from which it's not unreasonable to expect growth over the long term, so if you already hold enough cash to put a deposit down, why not get onto the housing ladder now rather than waiting?

    I still feel that you're underestimating investment risk and frankly it's naive to believe that an amateur can "find the gems" in terms of identifying individual shares that will give the best growth prospects, especially if you think that mining stocks are a way of mitigating a downturn, but good luck if you choose to go down that route (you'll need it!).
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