non taxpayer and isas 4 May 2004 at 7:28PM edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings 4 replies 5.7K views

Legacy_user

if one is a non-taxpayer does having an isa make any sense? considering the admin charges involved!!
thinking of closing a maxi isa because I am fed-up with the charges and has meanwhile become a full-time mom.
input would be appreciated. thanks in advance.

BULLNOTBEAR

No real gains for you elmien,

Depends on whether you will ever have investments that on maturity would lead to you using up your Capital Gains Tax Allowance (currently £8,200). Also, any interest/dividends may take your income over your annual income tax free allowance (£4,745 this tax year)

I cannot comment precisely on this holding but it looks like you may need to be reviewing your actual investment/fund if you say that the charges are taking a chunk out of the holdings.

You may need to have a look at re-registrating your holdings with a low charging fund supermarket/discount broker. Look at Martin's articles on these providers. Cavendish Online may be an option but depends on your holdings/provider.

Martyn

System

dear Martyn
thanks for your reply. It has been helpful.
regards
elmien

dunstonh

Also, some funds are still truely tax free. Corporate bonds and gilts for example.

Charges and tax should be looked at together. Recently, my bond business has increased and my ISA/OEIC business has reduced as the reduction in yield over 10 years is now often lower on bonds than it is on ISAs. (that means the charges are lower over a 10 year period). With the only small difference in tax between ISAs, OEICS and bonds, it is charges that seem to be taking more priority. Plus bonds can be more tax efficient than ISAs depending on your circumstances.

DiggingOut

One other factor is that your annual ISA allowances expire each year. So if you anticipate having higher income later, you may want to have your investments be tax-free -- but you will be limited in how much you can put into tax-free investments at that time.