Tax free dividend allowance 2016

bigadaj

colsten wrote: »

I agree, you'd need to keep an eye on CGT. Although if you were lucky enough to have your unwrapped £100K+ investment grow by over 11% each year, you'd probably not whinge too much about a bit of tax on the gains.

The dividend allowance makes no difference to my priority - which is maxing ISA and SIPP allowances each year.

I don't get that. You seem to be assuming that you get 5% divi for £100K, a declining %age thereafter? And why should dividends for less than £100K not be tax free?

You wouldn't pay capital gains on increase though, only when you sold them, so you can even out sales over multiple tax years to ensure you don't pay any capital gains.

The £100k is an arbitrary figure based on a 5% yield, to use the full £5k allowance, in reality typical yields would be below that so the actual capital sum is likely to be larger to maximise the allowance that can be used.

I'd agree that you'd wrap within isas first, but the sipp isn't so clear cut considering your personal circumstances. Where you don't get higher rate tax relief then pension advantages are less clear cut, you get the 25% tax free lump sum, but you are taxed on pension income. Tax free dividends might be more attractive for many people given that they can be invested in the same equities or funds.

Personally I'm utilising the full Isa allowance in its entirety and contributing into pensions to get out of higher rate tax, so not utilising the full annual allowance though it's starting to get close.

Over the last few years I've had various lumps of cash, from vested options and employer shares when the comoany has been sold, to critical illness payout uncanny lump sums, so given the limited amounts that you can get a decent return in in current accounts will be looking to utilise the dividend allowance. I currently have some unwrapped in any case, but it's another option, together with using vcts for me.

kidmugsy

bigadaj wrote: »

Not sure whether I wa unclear or everyone is being obtuse.

No; you were clear but boring. People were searching around for a way to make the thread interesting.

talexuser

bigadaj wrote: »

give hl a go for these given their maximum fee for holdings.

Don't you need over a million for that though? The 0.45% doesn't look so great for 100k?

bigfreddiel

bigadaj wrote: »

Thanks Freddie, you're definitely obtuse, to put it politely.

I don't think it was obtuse, of course I assume you would be filling your ISA each year with additional funds to the £100k in your non- ISA investment.

If not just trickle feed your £100k into an ISA over the next six years, then no CGT or tax returns to worry about.

Cheers fj

bigadaj

talexuser wrote: »

Don't you need over a million for that though? The 0.45% doesn't look so great for 100k?

Maximum £45 per year so long as you aren't in unit trusts or oeics.

chucknorris

talexuser wrote: »

For someone who is ISAed and SIPPed to the maximum, and has cash spare for an unwrapped investment, it will be considered I think.

The problem with 100k giving 5K of dividends a year would seem to be CGT. In that case you would need to choose say 2 good investment trusts with long term records, invest in one, and sell and buy the other as soon as capital is 11k up? (to give a little safety margin for trading) then when the second grows 11k sell and buy back the first...? Hope they don't grow too much every year?

Hope they don't grow too much? Why? You still would get to keep at least 72% of the growth after paying CGT. When I sell my properties the CGT bill is going to be about £330k, I wish it was more like 10 times that.

talexuser

bigadaj wrote: »

Maximum £45 per year so long as you aren't in unit trusts or oeics.

Please could you explain, I've looked through HL but only see tiered rates for share dealing, etc, etc. can't see how to get to £45, assuming 100k in an investment trust. Thanks.

noh

talexuser wrote: »

Please could you explain, I've looked through HL but only see tiered rates for share dealing, etc, etc. can't see how to get to £45, assuming 100k in an investment trust. Thanks.

If you hold only shares or investment trusts in a HL Fund and Share dealing account there is no annual management charge. There is tiered rates for fund holdings.
http://www.hl.co.uk/investment-services/fund-and-share-account/charges-and-interest-rates

There is a 0.45% fee £45 maximum for shares and investment trusts held in their ISA
http://www.hl.co.uk/investment-services/isa/savings-interest-rates-and-charges

talexuser

Thanks for that clarification, I was assuming the thread was discussing outside an ISA since re 5k dividend allowance.