Stocks ISA transaction fees

edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
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coley54321coley54321 Forumite
34 Posts
edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
Hi,

I have some investments with a company and they are also investing the stocks and shares portion of my ISA. Lets say I gave them the 5,100 to invest, that entire amount comes under the ISA wrapper right?

So what about the transaction fees? The following is hypothetical, but say they bought 5,000 worth of shares, charged £50 and left £50 in cash doing nothing, just due to the rounding of the share prices.

I would rather pay the £50 fee out of seperate cash and then use £100 to buy more shares.

So the question really is this: Do transaction costs for investing in stocks and share ISAs have to be taken out of the £5100 or can I pay them seperately on top?

Thanks
Dave

Replies

  • dunstonhdunstonh Forumite
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    Do transaction costs for investing in stocks and share ISAs have to be taken out of the £5100 or can I pay them seperately on top?

    Both options are allowed. Indeed, you could pay £5150 into the ISA (£5100 for ISA and £50 if that was the explicit set up cost). It depends on what provider you use and what they allow.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Hi,

    I spoke with the company and they said...

    "All dealing charges associated with an ISA purchase have to be taken out of the ISA wrapper. This is an HMRC requirement. The only charges that can be taken outside the ISA are management fees."

    I looked online and could only find this in the following link...
    http://www.hmrc.gov.uk/isa/isa-guidance-notes-2008.pdf

    "
    Manager’s fees and charges
    10.47 Managers may choose to charge the investor for services they perform while managing an ISA.
    • Fees related to the administration of the ISA, such as charges for opening, maintaining or closing an ISA, or arranging for the investor to receive copies of annual reports and accounts or to attend General Meetings, can be paid from funds held outside the ISA, if the investor so wishes and the manager agrees.
    • Charges related to the purchase and sale of ISA investments, such as dealing commission charges, stamp duty, and the initial charge made by a unit trust manager when purchasing units in a unit trust (or by the authorised corporate director of an OEIC when purchasing units or shares in an OEIC), must be met from funds within the ISA.

    A simple test managers can apply is to ask themselves whether the charge would still be levied (at the same or another rate) had the investor made the purchase (or sale) outside the ISA.
    • If it would, the charge is part of the cost of acquiring (or disposing of) the investment and must be met from funds within the ISA.
    • If it would not, the charge is part of the cost of managing the ISA and can therefore be paid from funds held outside the ISA.
    "
    ************

    So there you have it. Transaction commissions MUST come out of the ISA value.
  • dunstonhdunstonh Forumite
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    So there you have it. Transaction commissions MUST come out of the ISA value.

    They dont have to. A number of platforms allow some of the charges to come out of non ISA money. Certain charges have to but a number can be redirected to the unwrapped account or an additional payment added to the ISA.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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