Can I/Should I use a maxi ISA??

steveo999

I have an ISA with alliance and leicester that I invested 2500 in last tax year and 700 so far this tax year.

I have just opened a Halifax sharebuilder account as there are a few shares I want to have a flutter on - not for a lot of money (around £1000) - however I have read about Maxi ISA's where I can have up to £7000 in shares and not pay any tax on returns?

Am I understanding this correctly? and is this a better option for me than the halifax sharebuilder?

Now can I open a Maxi ISA alongside my existing ISA and can anyone advise on who offers the best option for this?

Any additional info would be greatly appreciated - thanks guys!

Sillychuckie

No, you can not.
You have already invested in what looks like a mini cash isa (this year, £700), as well as the sharebuilder ISA (which I assume is a mini equity s+s ISA).

If you have either of these, you can not also have a maxi isa (until april, next tax yr).

tom188

You can however have a mini stocks and shares isa.

Due to tax credits not being reclaimable any more buying shares in an isa will only benefit in (a) no CGT to pay. (b) you are a higher rate tax payer.

steveo999

My Isa was openeed over in the last tax year and i have put in 700 this tax year though.

I do not believe sharebuilder is an ISA:

http://www.halifax.co.uk/sharedealing/sharebuilder.shtml

What is a mini stocks and shares ISA? and what is CGT?

oneilldo

My understanding is that you have a choice each financial year for your ISA allowance.

1. Maxi ISA -7k stocks and shares
2. Mini ISA - comprising of 3K cash ISA and 4k stocks and shares ISA

CGT = Capital Gains Tax. I think if you make a capital gains of more than about £7,900 in a tax year then you have to pay CGT on the amount above that. Investments in ISAs are exempt.

Someone with bit more knowledge will probably correct the above, but thats the jist of it

Cook_County

There are rules, and then are rules. Technically the limits on ISAs are as stated. However according to the story cut & pasted below from Investment Week on 20 November, HMRC won't care if you slightly over-subscribe:

"News

Revenue to use more discretion in cases of Isa oversubscription

BY phil craig

The Inland Revenue has eased procedures against investors that oversubscribe to Isas, taking action only if the offence is committed in consecutive years.

Under Isa rules, investors can either invest up to £7,000 in one maxi Isa, or up to £3,000 in a cash mini Isa and up to £4,000 in a stocks and shares Isa.

Under old procedures, if an investor breached these limits the Revenue would void tax relief on the invalid subscriptions, according to David Beeston, technical adviser at the Pep and Isa Managers' Association (Pima).

The Revenue is now differentiating between investors it feels have exceeded the tax-free allowance significantly and those who have only marginally breached the rules.

It will define what counts as a significant oversubscription on an annual basis according to the number of errors made and the resources it has available.

Under the new system, the Revenue will only void the tax relief on the oversubscribed portion of an investment in significant cases but, if it deems the case insignificant, will only take action if the investor oversubscribes the following year too. In such a case, tax relief on both years' extra investments would be removed.

In addition, the Revenue will not act on investors that hold more than one mini cash Isa so long as they stay within the £3,000 total limit, though this situation may change in future."

steveo999

so - if i have put some money in my already open ISA in this financial year, I cant open a Maxi ISA as well?

Can anyone recommend any good Maxi ISA's so I cna get more information?

dunstonh

so - if i have put some money in my already open ISA in this financial year, I cant open a Maxi ISA as well?

If you have already contributed to a mini cash ISA in this tax year then you can only do a mini equity ISA.

Can anyone recommend any good Maxi ISA's so I cna get more information?

It doesnt work that way. You have well over 10,000 investment options within an ISA and it depends on how, where, how long, what risk profile you have etc as to how you should invest your money.

With Cash ISAs you have the interest rate. With investment ISAs you have potential returns against different risks. You could invest in European Property or the stockmarkets of Emerging countries, or the UK stockmarket. you could pick a handful of individual shares if you really want total hands on DIY portfolio management. You wouldnt invest in one place either. You would spread it around (although some people do make the mistake to invest in just one place).

EdInvestor

You don't really need to worry about putting your shares in an ISA at this point.The Halifax Sharebuilder is a better bet.

The reason is that the stocks and shares ISA (whether maxi or mini) protects your gains from income tax on dividends and capital gains tax on realised capital gains.

But a basic rate taxpayer doesn't pay tax on dividends, and there is an annual CGT allowance of c.9k - so you would have to sell shares and make profits of more than 9k in order to be liable for any tax at all. So you don't at this point need the protection of the ISA.

If I were you I would wait until my Sharebuilder account had grown to, say 4k or so, and then move it into a 4k mini S&S ISA (Halifax do a cheapish one, on the same website as Sharebuilder). Then repeat, new money into Sharebuilder for the cheap fees, move to ISA when it reaches 4k.

It will be very useful to have your shares sheltered in the ISA later when your portfolio has grown and you start making real money.But there's no need to worry about it just yet.

JAMIEDODGER

edinvestor- i know i didnt ask the original question,but just wanted to say that you explain things really clearly with no jargon which makes it easier for us novices:) to understand...so many thanks for that:)

jamie

steveo999

edinvester - yeah thanks for that dude