Flexible ISA abuse for maximum profit

soulsaver

masonic wrote: »

There's no such distinction as far as HMRC is concerned. All money is either current year subscriptions or prior year subscriptions.

That's what I believed but you sowed a seed of doubt with 'prior year' vs 'prior years':)

soulsaver

xnoxxnox wrote: »

What I realized, I first need to max out the ISA allowance... and that seems to be impossible lol.

I do understand the bit of crystalizing losses/gains in the ISA to take money out, I'm just thinking about the impending market crash. Take money out, rebuy things outside of an ISA, watch them implode, put fresh money back into an ISA. Cause I don't see why the market risk should be held inside an ISA all year around given that CGT losses and gains might be useful for tax planning outside of an ISA too.

I.e. i wonder if it makes sense for most people, including me, to even buy things inside of an ISA if they are unlikely to hold things long enough to break CGT/dividend allowance and if such gains don't push one into a new tax bracket.

The more I think about it, the ISA stuff makes less and less sense. It would be much simpler to just scrap it, and bump up CGT allowance to accumulate at 20k/year and be done with it.

If you are convinced they'll implode just sell your ISA stocks & hold the cash in the S&S ISA while you wait for your predicted crash. Simple.

HappyHarry

xnoxxnox wrote: »

The more I think about it, the ISA stuff makes less and less sense. It would be much simpler to just scrap it, and bump up CGT allowance to accumulate at 20k/year and be done with it.

ISAs protect the holder from;
(i) Capital gains tax
(ii) Dividend tax
(iii) Tax on interest

If I had £100,000 in unwrapped investments, I would much prefer them to be in ISAs than not, so as to mitigate all three of these taxes.

If I had £1m in ISA investments (as many people do), then even more so.

Reed_Richards

soulsaver wrote: »

If you are convinced they'll implode just sell your ISA stocks & hold the cash in the S&S ISA while you wait for your predicted crash. Simple.

Or hold the cash in a Cash ISA (now that restrictions against transferring from one type of ISA to another have been abolished).

soulsaver

Reed_Richards wrote: »

Or hold the cash in a Cash ISA (now that restrictions against transferring from one type of ISA to another have been abolished).

True - but if you intend to catch the bounce you won't be happy waiting for up to 15 working days for the funds to be transferred back...