Stocks & Shares ISAs

Brand

oioisexy wrote: »

. . . this guide is a good starting point for someone willing to dip their toes for the first time. . . . there's too much to take in.

I agree with this, that it is a good guide (there is another pretty good overview on thisismoney but it is the nittygritty, which the guides can't possibly cover, that is hard to find out. Remember too that these schemes were worked out quickly, and inspired by a marketing person, so headline counts more than detail. I had queries on fees, penalties and incentiveswith TDW, interactive, youinvest, and iWeb and found it easiest just to ring them up.
Use the guides to get an idea of a couple of providers , then think what do I want to invest in and in what timescales, then think is an isa useful for this, or is it not worth the hassle and constraints and costs, especially if you are a basic rate taxpayer (it usually isn't - see Teresalia comment on this is money)and then look into the detail.

More specific providers to look at to start with: if you want to invest in a spread of funds with a smallish total £, then start with a %pa provider such as cavendish online ( for LSE listed shares (including London-listed ETFs and I.Ts covering abroad, and expecting several trades per year, look at commission rates, so start with x-o and iWeb. For the occasional New York listed stock or ETF, you can get that with iWeb. For the above shares (not funds) with infrequent trading, try interactiveinvestor, for a mix of LSE and NY listed shares, but mixed with some funds too, and try also interactiveinvestor. The frequent trader options are mentioned in the guide. For the thought-free, start with fundsmith, which is a single simple fund with an isa wrapper possible.
Also if you want a spread of providers, later, you need to keep your providers separate now, as you won't usually be able to split up a provider later.
The key thing we don't know is the interest rate on cash in a stocks and shares isa that inevitably the providers will need to offer after July,and if they will alter account transfer out charges later.

innovate

Brand wrote: »

Use the guides to get an idea of a couple of providers , then think what do I want to invest in and in what timescales, then think is an isa useful for this,

Sounds like a typical "shoot - ready - fire - aim" approach to me

Brand wrote: »

or is it not worth the hassle and constraints and costs, especially if you are a basic rate taxpayer (it usually isn't - see Teresalia comment on this is money)and then look into the detail.

I would wholly disagree that an S&S ISA isn't "usually" worth it if you have decided to invest. As has been discussed, just alone the avoidance of the need for detailed record keeping over several years for tax purposes is a massive benefit.

Apart from that, the tax shelter costs nothing extra (if you choose the right provider) but can be a massive advantage a few years or decades down the line, when some people might find themselves in higher rate tax brackets. And particularly now that it is possible to transfer from S&S to cash.

innovate

Brand wrote: »

Also if you want a spread of providers, later, you need to keep your providers separate now, as you won't usually be able to split up a provider later.

This would really only be a potential issue because the costs might be prohibitive, and/or in specie transfers might not be possible if you chose some exotic investment. A huge range of mainstream investments is available on all good platforms. If a provider doesn't offer the mainstream investments, that should perhaps be a very good reason to avoid them in the first instance.

p00hsticks

LookingToTheFuture wrote: »

Despite being a basic rate taxpayer and very unlikely to exceed the CGT limit for a very long time (if ever), I have chosen to invest using a tax wrapper for the simple reason that it saves a lot of bother with record keeping and filling out a tax return.

I think a lot of people underestimate their chances of exceeding the CTG limit. With the maximum yearly investment in a ISA at around £15,000 from July, and the CTG limit still at around £10k, it only requires a 66% rise in value for CTG to become a consideration. In a period when the market is rising (say over the last 3-5 years ) that's far from unlikely even for mainstream FTSE 100 companies - some have tripled or quadrupled in value over the last few years.

http://www.hl.co.uk/shares/stock-market-summary/ftse-100/performance

Nummularia

My concern with the article is the statement that only higher rate tax payers gain from the benefits of receiving dividends in an ISA. This might be true for many but not if one also receives tax credits. Admittedly, those saving in stocks and shares and receiving tax credits may be relatively small, but if one is on a low to medium income with a family but have a high level of savings (from inheritance in my case), then receiving dividends in an ISA makes a huge difference as one does not have to declare income from an ISA for the purpose of tax credits. Considering the taper on tax credits is 41%, this means that as a basic rate tax payer I effectively lose 51% of any dividend outside an ISA but only 10% in an ISA. I have therefore made an effort to move as much of my income generating investments into an ISA.

Brand

innovate wrote: »

. . .
I would wholly disagree that an S&S ISA isn't "usually" worth it if you have decided to invest. As has been discussed, just alone the avoidance of the need for detailed record keeping over several years for tax purposes is a massive benefit. . . .And particularly now that it is possible to transfer from S&S to cash.

Yes for you the convenience outweighs the cost and constraints, but I suspect you are unusual for a basic rate payer. An IFA should normally say not to bother unless trying to avoid CGT for a lump sum (e.g. for house purchase and need to sell investments all at once instead of sell yearly in chunks
interested in tax credit teatment of isa divis, as I thought assessment took into account all income. If true then yes, could be a big consideration for basic rate taxpayer.

Brand

innovate wrote: »

. . . And particularly now that it is possible to transfer from S&S to cash.

Yes, though t's not "now", it's July, so why not wait til then, so no costs incurred until then, and the providers revamp their offering perhaps?

Brand

innovate wrote: »

. . .A huge range of mainstream investments is available on all good platforms.

if you eventually want a provider who is good/cheapest for shares and and a provider good/cheapest for a small amount of money in funds and a provider for a large amount of money in funds and a provider who is good/cheapest for frequent share trading, this might not be the same provider, so you need to keep your isa pots separate, as you usually can't unravel a single isa. There might also be a good isa offering in the future, and you think I'd like to try that with a little of my isa money but not all.

hwindsor

A few people have stated as absolute that the only way to invest in funds is via a platform. That it is not possible to invest via the fund manager directly.
This is not true.
For many years I've invested into index trackers with Legal and general directly. I have only gone with platforms for active managed funds as the platform reduced the initial and annual management fees and hence it was cheaper to invest via the platform.
From my reading of the fees, it is better for people to invest in two of the funds listed (The L&G UK Index and the L&G US Index) directly with L&G themselves. It certainly was in comparison with investing via H&L as H&L gave no reduction in the AMCs (there are no initial fees) and added their own platform fee on top.
So am I right in that in this case (L&G) the charges are lower going directly? In which case why would anyone use a platform for these funds?

Nummularia

Brand wrote: »

interested in benefits exemption of isa divis, as I thought benefits system took into account all income. If true then yes, could be a big consideration for basic rate taxpayer.

See "What not to include" towards bottom of page on HMRC taxcredits other-income (not allowed to include link as "new user").