Question about SELF-SELECT ISAs

Martinslovechild

Greetings one & all,

For the past 6 years, I've been buying stocks & shares as part of an Investment Club. I would like to consider now setting up a second savings vehicle and have looked briefly into a Self-Select ISA, i.e. a product which allows me to buy & sell shares and/or funds within an ISA wrapper.

My current understanding of ISAs is that within a maxi-ISA, if I sell a fund, then the amount sold is no longer available to reinvest in the same tax year, e.g. if I invest £4,000 on day 1, sell the holding on day 2 and decide to reinvest the entire £4,000 on day 3, then I can't because the £4K has already been 'used up' for that tax year.

However - does this rule apply to a Self-Select ISA? For example, let's say that I purchase £4,000 worth of shares in Domino's Pizza on day 1. On day 100, let's say they've doubled in price and I want to sell half the holding to reinvest elsewhere (but within the same ISA) - is this possible?

Additionally, if I were holding £4,000 in Jessops whose price starts to crash, then could I sell the shares and reinvest the money within the ISA during the same tax year?

Ultimately, the question I'm trying to get answered is 'if I invest in shares in a company in a Self-Select ISA, once i've purchased the shares, can I chop & change my portfolio during the tax year (or thereafter), or am I stuck with the shares for the long-term?'

Many Thanks.

cheerfulcat

Martinslovechild wrote: »

My current understanding of ISAs is that within a maxi-ISA, if I sell a fund, then the amount sold is no longer available to reinvest in the same tax year, e.g. if I invest £4,000 on day 1, sell the holding on day 2 and decide to reinvest the entire £4,000 on day 3, then I can't because the £4K has already been 'used up' for that tax year.

If you sell the ISA then this is true. But you can transfer a fund ISA, thus keeping the tax wrapper. You can even transfer it to a self-select ISA.

Ultimately, the question I'm trying to get answered is 'if I invest in shares in a company in a Self-Select ISA, once i've purchased the shares, can I chop & change my portfolio during the tax year (or thereafter), or am I stuck with the shares for the long-term?'

Yes, you can change your investments as much as you like within the self-select ISA. Any gains and dividends do not count toward the ISA allowance - if for example you put £2000 into the ISA and buy £2000-worth of shares, they double in value and you sell them, and now you have £4000 in cash in the ISA, you can still add another £5000 from your original allowance. IYSWIM.

For example, let's say that I purchase £4,000 worth of shares in Domino's Pizza on day 1. On day 100, let's say they've doubled in price and I want to sell half the holding to reinvest elsewhere (but within the same ISA) - is this possible?

Yes, but it's worth mentioning here ( I know that you were only giving an example but it's useful...) that Domino's Pizza would not in fact be allowed in an ISA, being AIM-listed and as far as I know not listed on another exchange ( the only way an AIM-listed share may be held in an ISA ).

Martinslovechild

Brilliant.

Many Thanks, CheerfulCat.

EdInvestor

IMHO it's always best to separate the ISA wrapper from the funds or shares within it.

That way, you can open the ISA with a discount broker ( eg https://www.h-l.co.uk or https://www.selftrade.co.uk ) who will then offer rebates on your investment choices, which you can then chop and change as you wish.

So if you start off with Uranus Investment's Galactic Strategies fund and then decide later on that you really want the money in Neptune Investments' Earth Opportunities, then you can just sell Uranus and buy Neptune within your ISA, which remains untouched.No need to move it. You can also easily top it up every year just by simply putting more money into it, and then buying whatever you fancy in the way of new investments.

Whereas if you open your ISA with Uranus to start with, then you'd have to go through all the palaver of moving it to Neptune when you wanted to switch funds . :rolleyes:It's no wonder people end up with old badly performing investments, becuase it's such a hassle to sort them out.

This is one of the best things about SIPPs for pensions too - you can centralise all your pension money in the SIPP and then select the various investments within the wrapper. No need to move the whole thing every time you want to change investments - plus you get rebates as well with the cheap online ones.

Martinslovechild

Thanks EdInvestor,

Ironically, it was SelfTrade that I was looking at which started all these questions in the first place. I've used SelfTrade for the past 6 years for our Investment Club account and found them excellent.

Today, I noticed their advertisement in the Sunday Telegraph and the costs look pretty good when compared to others - £25 per annum administration fee ( although I 'm unsure as to whether this applies to all products, i.e. if I have 3 ISAs with them then is that 1 x £25 or 3 x £25? ) plus the usual share trading fee of £12.50 per trade plus 0.5% government tax.

They're also running an offer during March whereby funds purchased within a Self-Select ISA are at a reduced initial rate ( between 0% and 1% instead of the usual 'up to 5.5%' rate ).

cheerfulcat

£25 per annum administration fee ( although I 'm unsure as to whether this applies to all products, i.e. if I have 3 ISAs with them then is that 1 x £25 or 3 x £25? )

One admin fee covers all ISAs and PEPs.

YorkshireBoy

Martinslovechild wrote: »

They're also running an offer during March whereby funds purchased within a Self-Select ISA are at a reduced initial rate ( between 0% and 1% instead of the usual 'up to 5.5%' rate ).

Reduced (or in some cases, waived) initial fees are part of the normal Selftrade offering.

Is it possible that the "offer" you're referring to is the waiving of the normal £12.50 dealing fee for fund purchases (in a self-select ISA) from March 1st to May 31st?

https://www.selftrade.co.uk/fund2007

dunstonh

Selftrade are not that good for funds. They are quite expensive when compared to the other options available. They appear better suited for shares.

EdInvestor

Selftrade are good for shares and for Ishares/ETFs: their I-plan ISA with no dealing costs or stamp duty on purchases for ETFs is excellent value.ETFs are a new way of investing in trackers and there is now a big range available, international markets, bonds, even a UK dividend based one.

Hargreaves Lansdown is better for managed funds as it has no dealing fees and rebates more of the charges.

Martinslovechild

Many Thanks to all of you for all these good ideas.

Ideally, i'd like a company who I can buy both shares & funds from, that's why i've initially been looking at SelfTrade. I've been very successful buying & selling shares over the past 6 years; however, I realise that my day job prevents me from being as active as I would prefer with my share trades and I need to let external fund managers manage a proportion of my investments.

Initially, I'll definitely want to go down the route of shares only, rather than shares & funds. Of course, if Hargreaves Lansdown is better for managed funds then maybe I'll need to take up an account with SelfTrade for my shares at this point and an account with HL at some point in the future, although I would really have preferred to keep everything in one place.

Any thoughts?

cheerfulcat

That was my initial spread, and it is the most cost-effective - funds in an ISA with Hargreaves Lansdown, shares in an ISA with Selftrade ( Comdirect, in those days ). I gradually sold the funds, swapping them for shares and eventually moved the HL ISA to Selftrade because HL is quite expensive for shares.