Stocks & Shares ISAs

c-m

Is it me, or does article only discuss buying into funds? There doesn't seem to be any mention at all of using your stocks and shares ISA allowence to invest the money yourself DIY in individual stocks.

Perhaps that's because there isn't any benefit in having a stocks and share ISA for that, but still it seems to be overlooked.

TrustyOven

c-m wrote: »

Is it me, or does article only discuss buying into funds? There doesn't seem to be any mention at all of using your stocks and shares ISA allowence to invest the money yourself DIY in individual stocks.

Investing in individual company shares is a lot more risky than funds. You have to know about pricing, P/E, P/B, EBIT's, all the different profits that are reported, you'd have to read the annual financial reports from the companies, understand all the financial lingo, understand the products, know where the company is going etc. It takes more time and effort, and requires that you are more experienced or interested investor.

By the time you learn these things from books and other more specialised resources, you would probably not need the "MSE Guide to Investing in Individual Stocks" - you'd be more advanced.

c-m wrote: »

Perhaps that's because there isn't any benefit in having a stocks and share ISA for that

Why not?

colsten

c-m wrote: »

Is it me, or does article only discuss buying into funds? There doesn't seem to be any mention at all of using your stocks and shares ISA allowence to invest the money yourself DIY in individual stocks.

Perhaps that's because there isn't any benefit in having a stocks and share ISA for that, but still it seems to be overlooked.

Which article are you referring to?

Leaving that aside, most DIY investors, and probably most investors full stop, will be better advised to invest in funds than in individual shares as that's the way to spread your risks.

If, for whatever reason, you decide it would be better to invest in individual shares tan in funds, you would obviously benefit from making use of your ISA allowance for this investment as you won't be at risk of having to pay CGT for that investment. At least not as long as the Government keeps the existing ISA tax exemption rules.

c-m

TrustyOven wrote: »

Why not?

Because you still get taxed 10% on dividends and unless you make over £11k capital gains you don't have to pay tax on that anyway, so the benefit of a stocks and shares ISA is limited as far as I can see.

colsten wrote: »

Which article are you referring to?

The article that this thread exists for http://www.moneysavingexpert.com/savings/stocks-shares-isas?_ga=1.84502556.460337150.1413463868

masonic

c-m wrote: »

Because you still get taxed 10% on dividends and unless you make over £11k capital gains you don't have to pay tax on that anyway, so the benefit of a stocks and shares ISA is limited as far as I can see.

Should you one day have to pay higher rate tax, that will no longer be the case for the dividends. Also, within an ISA you'll never need to work out or prove to HMRC what your capital gains were. I suppose you might (for some strange reason) wish to move back into cash at some point in the future, in which case you can cash out and transfer the lot straight into a cash ISA regardless of how large your pot has grown.

So I wouldn't say there isn't any benefit.

colsten

Why would you not want to use your ISA allowance if you are investing? There are no downsides, only upsides.

jimjames

c-m wrote: »

Because you still get taxed 10% on dividends and unless you make over £11k capital gains you don't have to pay tax on that anyway, so the benefit of a stocks and shares ISA is limited as far as I can see.

If there is no cost difference why wouldn't you protect your assets in an ISA?

It's too late once you've amassed £100k of shares outside and realise you're getting clobbered for CGT and income tax. One thing that the austerity measures have shown is that there are likely to be tax rises and anything that helps protect that impact is worthwhile implementing while you can.

c-m

I said that the benefits are limited not that they are worthless. The article itself even points this out. Like most things, it all depends on the user's circumstances.

blahblahdoh

This MSE guide seems poor. One of the main recommendations, IWEB, gets some terrible reviews elsewhere, with complaints that share trades are delayed. That's a big red light for me. The best value trading ISA I can find through online searching is x-o.co.uk, which isn't even mentioned here. It has some limitations, but seems OK for the average punter looking for a UK shares ISA. There's a good, albeit ancient, review here: http://www.candidmoney.com/candidreviews/33/x-ocouk-online-share-dealing-review

Anyone have experience of this one? I'm considering it.

jimjames

c-m wrote: »

Because you still get taxed 10% on dividends and unless you make over £11k capital gains you don't have to pay tax on that anyway, so the benefit of a stocks and shares ISA is limited as far as I can see.

What happens if the CGT limit is dropped to £2500 as at least one party wants to do? It's too late by then if you've built up a portfolio that will be hit by tax and you can't easily escape.