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Stocks and Shares ISA or NISA limits
CE901350
Posts: 2 Newbie
I have read a few reports which say you shouldn't hold any more than £85K in one place for security. Is this applicable to Stocks and shares ISA/NISA's held with online companies such as iii?
I tried to ask iii themselves but they were far too vague for my liking.
Any info would be appreciated.
Thanks
CE
I tried to ask iii themselves but they were far too vague for my liking.
Any info would be appreciated.
Thanks
CE
0
Comments
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III is a platform for investment just like HL or Cavendish. They are nominee holders for your money. Assuming the platform has ringfenced the assets properly, in the event of the platform defaulting, it would not affect your ISAs. Each underlying fund house has £50k protection from the FSCS (NOT to cover performance/investment risk).
The FSCS has also recently confirmed if you are holding cash/uninvested money on the platform then the protection is also £50,000 because it's cash awaiting investment.
However, the situation is different if you have a Cash ISA on the platform and this is subject to an £85,000 protection limit.
http://www.ftadviser.com/2014/06/19/training/adviser-guides/client-cash-on-platforms-QQWRge5nOz7Ni7R0Dk6LnK/article.htmlStephen Covey once said that "when you teach once, you learn twice". That is the primary reason for my participation on the forums as an IFA.
Although I strive to provide accurate information in my posts, there may be the odd time when I fail. Yes I know it's hard to believe but even Your Hero can make mistakes. Apologies in advance.0 -
Presumably now that we live in a world of NISAs where cash and S&S can be held together in the same account (at least in theory), the situation may be different?The FSCS has also recently confirmed if you are holding cash/uninvested money on the platform then the protection is also £50,000 because it's cash awaiting investment.0 -
In theory, they can be held under one account but they are still split into Cash and Stocks and Shares ISAs. The Cash ISA part would still have £85k protection.Presumably now that we live in a world of NISAs where cash and S&S can be held together in the same account (at least in theory), the situation may be different?
Money held as cash on platform in the 'cash account' would not (only £50k as mentioned earlier).Stephen Covey once said that "when you teach once, you learn twice". That is the primary reason for my participation on the forums as an IFA.
Although I strive to provide accurate information in my posts, there may be the odd time when I fail. Yes I know it's hard to believe but even Your Hero can make mistakes. Apologies in advance.0 -
According to HMRC, cash and S&S can both be held in a single NISA:In theory, they can be held under one account but they are still split into Cash and Stocks and Shares ISAs. The Cash ISA part would still have £85k protection.
Money held as cash on platform in the 'cash account' would not (only £50k as mentioned earlier).
http://www.hmrc.gov.uk/isa/new-isa-faq.pdfCan I now have a single NISA for both my cash and stocks and shares investments?
Yes, you will be able to hold cash tax-free within your Stocks and Shares NISA if you wish, and your provider allows this. However, many savers may prefer to hold separate NISAs for cash and stocks and shares investments, and can continue to do so.
In that situation, it would be rather unfair to treat the cash as pending investment, just because the accounts aren't separate.0 -
According to HMRC, cash and S&S can both be held in a single NISA:
http://www.hmrc.gov.uk/isa/new-isa-faq.pdf
In that situation, it would be rather unfair to treat the cash as pending investment, just because the accounts aren't separate.
I think you misunderstood. If you hold cash in a NISA, then that's the cash isa element. You have to subscribe to the Cash ISA for the year, normal rules apply for 1 provider for cash and 1 for stocks and shares.
If you have sold stocks in the ISA and kept as cash, then this clearly isn't your Cash ISA contribution. This is your "cash account" that I am referring to.Stephen Covey once said that "when you teach once, you learn twice". That is the primary reason for my participation on the forums as an IFA.
Although I strive to provide accurate information in my posts, there may be the odd time when I fail. Yes I know it's hard to believe but even Your Hero can make mistakes. Apologies in advance.0 -
So you are saying that you can add cash to your S&S NISA and that would count as the cash ISA element, but the moment it is invested, it is permanently assigned to the S&S component until formally being transferred into cash again? Or are you saying all ISA managers must make you choose one or the other at the point of subscription and a formal transfer is needed to go from one to the other? Do you have a reference relating to this differential treatment of cash held within a S&S NISA?I think you misunderstood. If you hold cash in a NISA, then that's the cash isa element. You have to subscribe to the Cash ISA for the year, normal rules apply for 1 provider for cash and 1 for stocks and shares.
If you have sold stocks in the ISA and kept as cash, then this clearly isn't your Cash ISA contribution. This is your "cash account" that I am referring to.0 -
So you are saying that you can add cash to your S&S NISA and that would count as the cash ISA element, but the moment it is invested, it is permanently assigned to the S&S component until formally being transferred into cash again? Or are you saying all ISA managers must make you choose one or the other at the point of subscription and a formal transfer is needed to go from one to the other? Do you have a reference relating to this differential treatment of cash held within a S&S NISA?
I'm saying that this new 'NISA' doesn't change the rules for Cash ISA or Stocks and Shares ISA. The previous rules still apply. You need to choose what you are investing in to begin with.
Yes a formal transfer is required as it has always been to move between a Cash ISA and a stock & shares ISA:
http://www.hmrc.gov.uk/isa/new-isa-faq.pdf
"As currently, you will also be able to transfer any funds from a Cash NISA to a Stocks and Shares NISA if you wish.
[FONT=Arial,Arial][FONT=Arial,Arial]How do I transfer savings from my Stocks and Shares NISA to Cash NISA?
[/FONT][/FONT]
From 1 July 2014, you should approach the provider of the Cash NISA you wish to transfer your funds to, who will contact the manager of your Stocks and Shares account to arrange the transfer. You should not withdraw sums from your Stocks and Shares account yourself in order to deposit it into a Cash NISA. If you do, any amount that you pay in may count as a fresh payment against your overall limit of £15,000. "
Stephen Covey once said that "when you teach once, you learn twice". That is the primary reason for my participation on the forums as an IFA.
Although I strive to provide accurate information in my posts, there may be the odd time when I fail. Yes I know it's hard to believe but even Your Hero can make mistakes. Apologies in advance.0 -
As I quoted earlier, HMRC state "Yes, you will be able to hold cash tax-free within your Stocks and Shares NISA if you wish, and your provider allows this. However, many savers may prefer to hold separate NISAs for cash and stocks and shares investments, and can continue to do so."I'm saying that this new 'NISA' doesn't change the rules for Cash ISA or Stocks and Shares ISA. The previous rules still apply. You need to choose what you are investing in to begin with.
Yes a formal transfer is required as it has always been to move between a Cash ISA and a stock & shares ISA:
Clearly HMRC believe that holding cash within a S&S NISA is not the same as holding separate NISAs for cash and S&S investments, indicating that customers would be free to make a choice (with no indication that cash held within a S&S ISA would be in any way different to cash held within a cash ISA). All of your posts seem to relate to the latter situation (separate components), while I am asking about the former (single component).
Specifically, I would be very eager to learn of any evidence you have that cash contained within a S&S NISA account in certain circumstances would not be subject to the same treatment as cash held within a cash ISA.0 -
As I quoted earlier, HMRC state "Yes, you will be able to hold cash tax-free within your Stocks and Shares NISA if you wish, and your provider allows this. However, many savers may prefer to hold separate NISAs for cash and stocks and shares investments, and can continue to do so."
Clearly HMRC believe that holding cash within a S&S NISA is not the same as holding separate NISAs for cash and S&S investments, indicating that customers would be free to make a choice (with no indication that cash held within a S&S ISA would be in any way different to cash held within a cash ISA). All of your posts seem to relate to the latter situation (separate components), while I am asking about the former (single component).
Specifically, I would be very eager to learn of any evidence you have that cash contained within a S&S NISA account in certain circumstances would not be subject to the same treatment as cash held within a cash ISA.
Apologies, I just reread what I wrote in post #6 and I confused myself there talking about cash account. The cash account on a platform that I was referring to originally is for pending investments, covering fees etc., which is subject to a £50k protection. Are we ok about this so far?
The tax treatment is the same (tax-free) for cash in both ISAs. You have always been allowed to keep cash in a Stocks & Shares ISA (with provider permitting) but it was taxed at 20%. The new NISA rules changed this.
The difference that I was trying to point out is that just because you hold cash in your Stocks ISA, this is not a cash ISA by definition. E.g.
If I invested £5k in SS ISA this year with HL.
I then opened a cash ISA with Barclays. I have 1 provider for each Cash and SS ISA.
If I subsequently sold my Unit trusts in the SS ISA, and kept as cash because I'm not sure where to invest it, this is not your "cash ISA". If it was, then you would have 2 cash ISA providers in the same tax year and this wouldn't be allowed. This is still your stocks and shares ISA.
This was the point I was trying to make earlier.Stephen Covey once said that "when you teach once, you learn twice". That is the primary reason for my participation on the forums as an IFA.
Although I strive to provide accurate information in my posts, there may be the odd time when I fail. Yes I know it's hard to believe but even Your Hero can make mistakes. Apologies in advance.0 -
I'm happy with that as a description of the pre-NISA situation, yes.Apologies, I just reread what I wrote in post #6 and I confused myself there talking about cash account. The cash account on a platform that I was referring to originally is for pending investments, covering fees etc., which is subject to a £50k protection. Are we ok about this so far?
Completely agree with the first paragraph (and never believed you suggested otherwise). Where we disagree is in the second paragraph. I contend that the quote I posted previously, in the absence of any more detailed statement to the contrary, implies that now cash held within a S&S NISA is indistinguishable from cash held within a cash NISA (and hence, the FSCS rules should be updated to reflect this). There have been other statements flying around that cash and S&S can be held separately or mixed, so unless these messages have been dumbed down for the consumer to the point of being misleading, the cash and S&S labels are only relevant if you make a choice to separate the two.The tax treatment is the same (tax-free) for cash in both ISAs. You have always been allowed to keep cash in a Stocks & Shares ISA (with provider permitting) but it was taxed at 20%. The new NISA rules changed this.
The difference that I was trying to point out is that just because you hold cash in your Stocks ISA, this is not a cash ISA by definition. E.g.
This is an interesting situation you raise, because by this logic none of the benefits of a cash NISA should be extended to the cash held within the S&S NISA, but I think we agree that even in this situation, the money could earn interest tax free.If I invested £5k in SS ISA this year with HL.
I then opened a cash ISA with Barclays. I have 1 provider for each Cash and SS ISA.
If I subsequently sold my Unit trusts in the SS ISA, and kept as cash because I'm not sure where to invest it, this is not your "cash ISA". If it was, then you would have 2 cash ISA providers in the same tax year and this wouldn't be allowed. This is still your stocks and shares ISA.
This was the point I was trying to make earlier.
Consider the counter example, where I go to 'All-in-one Investment Solutions Limited' and take out their Universal NISA, which allows me to hold a wealth of investments, but also pays me a table topping tax-free interest rate on my cash. Suppose I contribute £15,000, holding £5k in cash and the rest in a Vanguard Lifestrategy fund. Let's suppose I continue to invest in the same proportions up to £50k. My intention is never to invest the amount I leave in cash, so my point is that it would be rather unfair at that point not to have the same FSCS protection as somebody who did exactly the same, but split their NISA into separate components.
Consider also the situation where I may wish to 'lifestyle' my NISA gradually from investments into cash and I hold both in the same component. Even though I have no intention of reinvesting the cash, I would be subject to a lower limit of compensation simply by virtue of the choice I made not to have separate cash and S&S NISAs.
The only workable alternative to cash in a S&S NISA being treated as indistinguishable from cash in a cash NISA is for ISA managers to be prevented from allowing cash and S&S in the same component (i.e. mandatory different sub-accounts for S&S and cash components), but with the freedom to transfer from S&S to cash, there would be no barrier to anyone moving the cash between the sub-accounts thereby defeating the object of the separation.0
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