S&s isa

dkcrooby

Hi,

Hopefully this is in the right area.

I'm wanting to start spread betting. I only have a small amount of £1000.

According to Martin, you're 'allowed to make £11,000 of gains this tax year (2014/15) tax-free outside an ISA. So you would ONLY gain using a stocks & shares ISA in a year where you were making total gains over £11,000.'

So with that in mind, is there any reason for me NOT to put the £1000 in a S&S ISA ready for me to buy shares when the time comes? I would like to at least put the money into an ISA but not sure what's best before the 5th April.

I already have a cash ISA but the building society it's with, doesn't trade in shares or have stocks and shares ISA's.

Any advice/help would be much appreciated. I am an absolute newbie and want to make sure I do things the best way possible.

:-)

badger09

dkcrooby wrote: »

Hi,

Hopefully this is in the right area.

I'm wanting to start spread betting. I only have a small amount of £1000.

According to Martin, you're 'allowed to make £11,000 of gains this tax year (2014/15) tax-free outside an ISA. So you would ONLY gain using a stocks & shares ISA in a year where you were making total gains over £11,000.'

So with that in mind, is there any reason for me NOT to put the £1000 in a S&S ISA ready for me to buy shares when the time comes? I would like to at least put the money into an ISA but not sure what's best before the 5th April.

I already have a cash ISA but the building society it's with, doesn't trade in shares or have stocks and shares ISA's.

Any advice/help would be much appreciated. I am an absolute newbie and want to make sure I do things the best way possible.

:-)

Don't do it

For a more comprehensive reply, there's another thread here

https://forums.moneysavingexpert.com/discussion/5208636

jimjames

dkcrooby wrote: »

Hi,

So with that in mind, is there any reason for me NOT to put the £1000 in a S&S ISA ready for me to buy shares when the time comes? I would like to at least put the money into an ISA but not sure what's best before the 5th April.

Any advice/help would be much appreciated. I am an absolute newbie and want to make sure I do things the best way possible.

:-)

If you are spread betting then you don't need to use an ISA, in fact I believe you won't be able to use an ISA for spread bets.

Regardless of that, with £1000 there is no urgency to do anything before 5th April as you can easily use the ISA limit this year or next.

bowlhead99

dkcrooby wrote: »

Hi,

Hopefully this is in the right area.

I'm wanting to start spread betting. I only have a small amount of £1000.

OK. Open up a spreadbetting account with a spreadbetting provider. I use http://www.ig.com/uk/spread-betting; they have good systems and a decent interface. Many beginners lose their shirts of course, but that's not the provider's fault Roll up roll up, place yer bets.

According to Martin, you're 'allowed to make £11,000 of gains this tax year (2014/15) tax-free outside an ISA. So you would ONLY gain using a stocks & shares ISA in a year where you were making total gains over £11,000.'

If you are looking to use spreadbets to make your money on the markets, you will find that the advantage of using spreadbets is that they are entirely tax free in the UK. The gains referred to by Martin are those you make when selling a share or a contract for difference at a higher price than you paid for it. They can be subject to tax when you make £11000 or more of them in any one tax year and even if you don't make that much you have to keep detailed records to prove it.

By contrast, you don't pay any tax on winning a bet.

So with that in mind, is there any reason for me NOT to put the £1000 in a S&S ISA ready for me to buy shares when the time comes? I would like to at least put the money into an ISA but not sure what's best before the 5th April.

You can't hold a spread bet inside an S&S ISA. Bets are not subject to tax, as mentioned. Do you simply mean that you just want to buy and sell shares inside an ISA?

Even if that is the case, I see no reason why you need to hurry to put your £1000 into the ISA before 5 April unless you are also going to put more than £14000 of other new money into an ISA in the 2015/16 tax year and run out of allowance.

I already have a cash ISA but the building society it's with, doesn't trade in shares or have stocks and shares ISA's.

That's common, most building societies are not stockbrokers and do not have their own investment platforms. The banks and building societies that do, typically charge more for the same service than the independent specialists.

Any advice/help would be much appreciated. I am an absolute newbie and want to make sure I do things the best way possible.

You haven't said what exactly it is that you want to do. I guess not spreadbetting if you are talking about investing in a stocks and shares ISA.

The smartest thing you can do with S&S ISAs is use them to hold investment fund(s) which collectively invest their investors' cash across lots of companies.

The least smart thing you could do is to spend the £1000 on buying shares in 10 companies that you like the look of. At £100 per company, the typical cost of £10 per purchase plus about 50p stamp duty will mean you will only get around £89.50 of shares in each company. They would each then have to rise in value 23% to be worth £110 so that you could sell them, pay the £10 cost of sale, and be left with your £100 again.

A 23% rise at the usual growth rates of about 7% a year should allow you to get there in about 3 years. Unless your shares perform worse than average in or we have a market downturn, in which case it could take you 5-10 years to recover your money and make the 23% to get out for break-even.

I am not sure what advice / help you are looking for but there are lots of threads here about choosing S&S ISA providers.

dkcrooby

Thanks for the advice and link badger09. :-) I'm going to read that this evening when I have a bit of peace. School holidays I'm afraid so kids running riot!

Jimjames: Thanks for your reply too. I think I'm a bit confused about the ISA's as I thought I'd have to put the money into an ISA before the 5th in order to for it to be free from tax. There's no way I will get anywhere near next years threshold as most of our extra income goes towards overpaying the mortgage.

bowlhead99 wrote: »

The least smart thing you could do is to spend the £1000 on buying shares in 10 companies that you like the look of. At £100 per company, the typical cost of £10 per purchase plus about 50p stamp duty will mean you will only get around £89.50 of shares in each company. They would each then have to rise in value 23% to be worth £110 so that you could sell them, pay the £10 cost of sale, and be left with your £100 again.

Thanks for your reply Bowlhead99. I had planned on buying £250 worth of shares for 4 different companies, if possible, leaving the shares for as long as possible but as you've said, it wouldn't be worth it. After having a look, this is known as trading isn't it? I can only lose what I put in. Spreadbetting is leveraged and that's not something I want to do. I think I might take a look at investment funds as you've mentioned.

Lol, I'm clueless but learning. Please excuse me.