Most tax-efficient way of investing now ISA filled

eskbanker

Dunney77 wrote: »

But wouldn't the effects of compounding be limited if money kept being taken out?

No, not if all the sale proceeds are immediately being reinvested in similar products....

atush

Basically, you have a few options for investing the money.

But do you have any debt? An emergency cash savings fund?

If no/yes, and you have used your isa allowance, you have 2 good options (there are a few others out there like VCTs that I wont rec for you at this time). If the money will be needed before age 57, then use an unwrapped investment acct. And time sales every few years to use up some of your CGT. If the money isn't needed before age 57, then use a pension. Usually your employers pension is the place to start (for matching contribs plus usually low charges). Otherwise a PP or Sipp (Personal pension, and self invested personal pension).

You can also save the money into current accts, and fill your new isa allowance in april next year.

Dunney77

An issue I have is that I wan't to return to the Channel Islands when I am older (currently live in London but born in Jersey).

There is no Capital Gains Tax there so is there a way I can invest here but withdraw my money as a retiree in the Channel Isles - exempt from CGT?

Technically I would not be bringing in any funds to the UK as it would be an 'offshore pension' plan which would be utilised when living back in Jersey.

I suppose its just an offshore savings plan really.

themanfromamarillo

One thing you might want to look up is Bed and ISA. This is when you sell investments outside an ISA, move the cash into your ISA (within the usual ISA annual limits) and then buy the same shares within the ISA. Some brokers have automatic services to do this, others you need to do the steps manually.

grey_gym_sock

Dunney77 wrote: »

An issue I have is that I wan't to return to the Channel Islands when I am older (currently live in London but born in Jersey).

There is no Capital Gains Tax there so is there a way I can invest here but withdraw my money as a retiree in the Channel Isles - exempt from CGT?

if you invest in a fund in a simple taxable account in the UK, then UK CGT is only due when you sell (all or part of) your holding. if that doesn't happen until you're no longer resident in the UK, then UK CGT doesn't apply - unless you are only temporarily non-resident in the UK, which means (i think) that you come back to the UK again after less than 5 years.

so basically that works as you'd like - unless jersey introduces CGT, or your plans change, or etc etc ...

so far in dividends on the fund goes, from next tax year the first £5,000 of dividends are untaxed regardless of your tax bracket, and £30,000 in lifestrategy will only generate perhaps £600 of dividends per year. in the current tax year, a little tax on dividends may be due, but only if you're a higher/additional rate taxpayer.

Technically I would not be bringing in any funds to the UK as it would be an 'offshore pension' plan which would be utilised when living back in Jersey.

I suppose its just an offshore savings plan really.

'bringing funds to the UK' is not the point. as long as you're UK resident, you're subject to UK taxes on your worldwide income and gains.

as stated above, using a simple taxable account in the UK appears to achieve what you want. there are more complicated offshore products with different tax treatment, but i don't know much about them, or even which kind of product you might mean. you're probably making this more complicated than necessary, when a taxable account would do the job.

Dunney77

grey_gym_sock wrote: »

if you invest in a fund in a simple taxable account in the UK, then UK CGT is only due when you sell (all or part of) your holding. if that doesn't happen until you're no longer resident in the UK, then UK CGT doesn't apply - unless you are only temporarily non-resident in the UK, which means (i think) that you come back to the UK again after less than 5 years.

so basically that works as you'd like - unless jersey introduces CGT, or your plans change, or etc etc ...

so far in dividends on the fund goes, from next tax year the first £5,000 of dividends are untaxed regardless of your tax bracket, and £30,000 in lifestrategy will only generate perhaps £600 of dividends per year. in the current tax year, a little tax on dividends may be due, but only if you're a higher/additional rate taxpayer.



'bringing funds to the UK' is not the point. as long as you're UK resident, you're subject to UK taxes on your worldwide income and gains.

as stated above, using a simple taxable account in the UK appears to achieve what you want. there are more complicated offshore products with different tax treatment, but i don't know much about them, or even which kind of product you might mean. you're probably making this more complicated than necessary, when a taxable account would do the job.

Thank you for your response!

So I could open an additional account to my ISA with Charles Stanley, invest in one of the Vanguard LS funds, try to compound over the years without withdrawing but instead depositing, move back to Jersey without the burden of CGT when I withdraw as a pension?

grey_gym_sock

Dunney77 wrote: »

So I could open an additional account to my ISA with Charles Stanley, invest in one of the Vanguard LS funds, try to compound over the years without withdrawing but instead depositing, move back to Jersey without the burden of CGT when I withdraw as a pension?

yes.

though to be cautious, rather than letting extremely large unrealized gains build up while you're in the UK, it might be better to realize as much as you can within the CGT allowance each year (i.e. so you don't pay any CGT on them), and immediately reinvest the proceeds either in the identical fund an S&S ISA (if you have spare ISA allowance) or in a different but very similar fund in your taxable account. the point being that if things change (e.g. you decide to stay in the UK) then you won't build up a larger unrealized gain (and hence higher potential CGT bill) than necessary.

atush

Dunney77 wrote: »

Thank you for your response!

So I could open an additional account to my ISA with Charles Stanley, invest in one of the Vanguard LS funds, try to compound over the years without withdrawing but instead depositing, move back to Jersey without the burden of CGT when I withdraw as a pension?

Yes, or you could move some into a new ISA each tax year.