Allowed to split stocks and shares ISA between different providers?

summerday

Hello,

I've been reading conflicting things on this, so please can someone help give me a definitive answer.

This week I set up a new Tracker fund with a company I hadn't used before. I had thought that I hadn't invested any money into any other stocks and shares this tax year, but then realised that I did after all invest a few hundred in a s&s ISA last summer.

So, I just rang the new investment company (M&G) who said that it is ok to invest in more than one tracker fund, both in ISAs, as long as you don't exceed the limit of how much you can invest in an ISA.

This seems contrary to other things I have read, and I'm a bit worried that I will try to get in to trouble for breaking the ISA rules Will I be able to just cancel the investment I tried to make into the new company earlier this week (paperwork has arrived today asking me to send proof of ID to prevent money laundering etc)?

Advice will be much appreciated, many thanks.

le_loup

It's the provider that's important, not the fund manager. You can only invest in one provider each year but you can have a mixture of funds.

Archi_Bald

summerday wrote: »

So, I just rang the new investment company (M&G) who said that it is ok to invest in more than one tracker fund, both in ISAs, as long as you don't exceed the limit of how much you can invest in an ISA.

this is incorrect.
http://www.hmrc.gov.uk/isa/faqs.htm#8

You can call HMRC and ask them for guidance.

summerday wrote: »

Will I be able to just cancel the investment I tried to make into the new company earlier this week (paperwork has arrived today asking me to send proof of ID to prevent money laundering etc)?s.

Have you got a cooling off period?

dunstonh

Who is your ISA manager? You are allowed to contribute to one ISA manager a year. The fund manager is not important. The fund is not important. The iSA manager is.

Archi_Bald

You are also allowed to change the ISA Manager during the year. Provided your existing ISA has been transferred by the new ISA Manager, you can make deposits up to your allowance with the second ISA Manager.

summerday

Thanks for the replies. I invested in a L&G tracker fund last summer and this week invested in a different tracker fund with M&G. Both were direct with the companies. I invested in the new one online, so perhaps that is covered by distance selling regulations so would allow a cooling off period?

From what I've googled and from some of the replies here, I really think the man I spoke to on the phone at M&G has misunderstood the rules.

Perhaps it's best if I write to them and apologise for my mistake asking them to refund it? Has anyone else accidentally done similar? I mainly don't want to get into trouble for breaking the ISA rules.

jamesd

The M&G person you spoke with is wrong and you should use any available cooling off period to cancel the transaction as soon as possible. Once any available cooling off period has ended it'll count as an ISA subscription and you'll lose that much of your available ISA allowance for this tax year if you take it out. Quotes belof are from HMRC's official Guidance Notes for ISA Managers.

5.5 Subject to paragraph 5.7, ISA managers may, in their terms and conditions, allow investors the right to cancel their cash subscription to an ISA, or packaged product within an ISA, within a set period after the receipt by the investor of the notice of the right to cancel. Provided that this period – the cancellation period - does not exceed 30 days (after the notice has been received), investors who cancel their subscription within the cancellation period are exempt from UK income and capital gains tax on any income or gains arising from the subscription in the period.

Strictly investors who withdraw their subscriptions from an ISA by exercising their right to cancel have made a subscription to an ISA. But where the subscription is cancelled within the set period, investors will be treated as though they have not subscribed to an ISA.

5.7 Instead of providing cancellation rights, ISA managers may allow investors the right not to proceed with the ISA contract (in FCA terminology, a pre-contractual right to withdraw). The withdrawal period is 7 calendar days from the receipt by the ISA manager of the application to open an ISA.

Where withdrawal rights are offered:
o the ISA can only begin on the expiry of the withdrawal period, therefore the application must be received by the ISA manager by 29 March of the tax year for which the application is made
o during the withdrawal period the client money rules of the ISA manager’s regulatory body will apply to the cash subscription, and
o any interest which is paid at the end of the withdrawal period will not be exempt from tax and will count towards the subscription limit if it is paid into the ISA.

Investors who exercise their right to withdraw from the ISA contract are free to subscribe to another ISA in the same tax year.

So whether it's cancellation or withdrawal you need to act fast. Don't write initially, phone. You don't have time to write, you can't afford the delay.

jamesd

Moving on to how to achieve what you want, L&G presumably are offering an ISA that allows investments only in their products. You can probably use other L&G products within it if you add more money. You can also transfer the whole current year subscription from them to a S&S ISA platform then add money to that and buy whatever you want within that, from any provider the platform offers.

Now, if you can't get the M&G part out now without losing the allowance, just leave it there. HMRC's usual practice seems to be to accept such mistakes once per person and send them a letter about it telling them that they broke the rules and not to do it again. That's provided the total paid in to all places doesn't exceed the ISA allowance, or not by much.

Vortigern

Leaving aside the question of 2 ISAs, is it wise to buy funds directly from the fund managers? Is it not cheaper to buy from a platform or fund supermarket which will discount the initial charge? (And allow you to hold funds from different managers)

le_loup

Not always. Some funds have no initial charge.
But generally it is probably best to go through a platform.