Share dealing ISA question

nickohorny

jimjames wrote: »

I'd also recommend that as a declared newbie that you look carefully at whether funds would suit your situation better than buying shares. Trading shares to make short term profits is one way almost guaranteed to make you poorer. Generally the people who have accumulated the most wealth investing have done so buying and holding long term.

Thanks for the reply. Yes you are right, I am def a newbie, not wanting to rush into anything either, I am just preparing for how to invest. I have also signed up to Investors Chronicle to get a better understanding and gain more knowledge so I can begin to build a good investment plan.

What are your thoughts on investing for in both funds, and stocks?

I was looking at iwebb brokers and you need to open separate ISA accounts to trade Funds ISA / Stocks & shares ISA.

Am I understanding this correctly - If I have a cash ISA with 5,760 already in, I have the same amount this tax year to invest in a Stocks and shares ISA.

SO, can I spread that 5,760 over a stocks and shares ISA and a FUNDS ISA? for example, have 3,000 in a stocks & shares ISA and 2,760 within a FUNDS ISA? It would actually mean opening 2 accounts with iWebb I suppose, I will contact them but just wondering what general advice here is.

hmmm more confusion! :mad:

westy22

nickohorny wrote: »

Am I understanding this correctly - If I have a cash ISA with 5,760 already in, I have the same amount this tax year to invest in a Stocks and shares ISA.

SO, can I spread that 5,760 over a stocks and shares ISA and a FUNDS ISA? for example, have 3,000 in a stocks & shares ISA and 2,760 within a FUNDS ISA? It would actually mean opening 2 accounts with iWebb I suppose, I will contact them but just wondering what general advice here is.

hmmm more confusion! :mad:

I am pretty sure that iWeb are binning the concept of separate funds ISAs and S&S ISAs and will, instead, offer one combined S&S ISA which will hold all investment products(as their owner Halifax has already done).

In general, you can only contribute to one S&S ISA per year.

nickohorny

Something I failed to mention with all this - It actually only hit me earlier!

I am most likely moving abroad this year, in the next month or so to work in Asia for a while, around a year maybe 2.

So now what are my options?

I have been reading it is pointless to open up an ISA share dealing as I am not allowed to continue paying into it as I go (which I wanted to next tax year) whilst abroad, so therefore, should I really be looking to open a regular share dealing account?

hmmm

nickohorny

Sorry for the *bump*

Could do with some advice. Cannot seem to find much on the net. I am not sure if what I am saying is completely correct about living abroad.

bowlhead99

If you go abroad you can keep your existing ISAs open and growing free of UK tax but you can't subscribe any more in those years while you are not a UK tax resident.

So, leaving say 10k behind in an ISA that you can view and shuffle the holdings online, and coming back to the UK later with it worth 15k and no UK tax to pay is good. Particularly as it will keep growing from that 15k level over the years thereafter when you're back in the country and can add to it.

In other words if you put say 5k in 2013/14 tax year and 5k in 2014/15 tax year, then go abroad for a bit; in 2016/17 you come back it's worth 15 and you can add another 10-12k that tax year, giving you 25k+ wrapped up and safe from the taxman indefinitely. If you had not invested in an ISA before you went, once you came back you in 2016 you would only be able to put that that year's allowance in, and would only have 10-12k wrapped up rather than a total of 25k+. It could take a couple of years to build up your pot, not because you don't have the money from other sources but just because there is an annual limit on what you can subscribe as new money into the wrapper.

Obviously if your income is not expected to be particularly big and you have other things to typically spend it on, you don't need to worry about not being able to fit your spare cash into the annual ISA wrapper so the annual limts are less of a concern because you never run out of headroom.

A couple of things to bear in mind if you're looking at opening an account when you already know you're going overseas.

1) Just because income and gains made inside an ISA wrapper are exempt from UK tax, doesn't mean they are exempt from tax in the country in which you become tax resident. So if Timbuktu or Outer Mongolia want you to do a tax return and declare your worldwide income each year, they may not recognise and give special treatment to the fact that some of the income is generated inside the ISA, if they don't have a tax treaty with the UK government; because they don't know what an ISA is. The effectiveness as a tax shelter depends on where you end up being resident.

2) While you are away, you may find your ISA provider no longer wants to do business with you for a whole range of business reasons - for example your balance drops too low, or they generally don't want to maintain accounts for Indonesian residents, or they are changing their services and getting out of the ISA game or whatever. If you were in a UK, this would not present much of a practical problem because you would just go and find an appropriate alternative provider and transfer your assets inside the wrapper. However, if you try and arrange an online switch to a new provider and you are not coming to them as a UK resident but as someone resident in Guatemala or Panama or Afghanistan or wherever, you will probably tell you you can't open a new account. So you could have to sell up your assets and lose the wrapper.

Neither of the potential problems 1 or 2 were a big deal for me when I moved overseas for a couple of years. Being made to pay tax on your income is something that would have happened if your assets were unwrapped anyway, and would perhaps not affect you in every country. And if you do lose your ISA status due to some admin issue you are no worse off than if you hadn't got the ISA status in the first place. I just kept my ISAs and came back to them with no issues.

nickohorny

wow, thanks bowlhead99, really good advice.

I have a question - what if I did not open it before I left, but once I was over there I simply logged on my online banking and opened it up from online? so I am not in the country, but happened to do it from abroad - would I get in trouble for this?

I would not be rejected opening it as I get messages everyday to open one with my bank, just a few clicks and be able to transfer money between my current account easily enough.

I do not want to get in trouble down the road so am just checking.

I ask as this is in regard to another in my family. Who will not be getting the chunk of her money until summer time.

thanks again

bowlhead99

nickohorny wrote: »

- what if I did not open it before I left, but once I was over there I simply logged on my online banking and opened it up from online? so I am not in the country, but happened to do it from abroad - would I get in trouble for this?

I would not be rejected opening it as I get messages everyday to open one with my bank, just a few clicks and be able to transfer money between my current account easily enough.

I do not want to get in trouble down the road so am just checking.

I ask as this is in regard to another in my family. Who will not be getting the chunk of her money until summer time.

thanks again

When you do the "couple of clicks" to open ISA accounts online you still have make the same declarations that you are UK tax resident, this is your genuine address and national insurance number etc.

You might be perfectly happy to lie in that situation to get a bank to provide with a service it does not want to provide, or to a tax authority to avoid a tax you don't want pay. We all have our own moral compass. If you file a declaration of non residency in June 2014 and then your bank reports to HMRC that you later opened a residents-only tax privileged account, you might expect HMRC to say, "hmm, what's up with that?".

Of course, if you are resident in an overseas country you may find they have their own tax exempt savings and investment accounts for residents that you could use.

EdGasket

With a small amount to invest and assuming you avoid companies paying PIDs (see my post above) then there is really little advantage in having a S&S ISA over a normal trading account. So if you are going abroad, will be non-resident and can't fully fund an ISA right now then a trading account sounds the better option.

nickohorny

Thank you everyone, very helpful.

I think I will open a share-dealing account with iweb, not touch the ISA and tell my friend the same whilst away.

Now for the next phase - seeking out the right funds and shares!

Thanks

nickohorny

Thank you everyone, very helpful.

I think I will open a share-dealing account with iweb, not touch the ISA and tell my friend the same whilst away.

Now for the next phase - seeking out the right funds and shares!

Thanks