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Stocks/Shares ISA Consideration Figure

I have recently sold HSBC Ord shares and invested proceeds in to a HSBC Stocks and Shares ISA. I wish to make a further small cash payment in to the ISA to protect my current interest rate. However I am stopped from doing this as the Bank states I have fully used my allowance for this year as associated charges of £110 have been treated as part of my annual subscription. I have always understood that when calculating tax due on stocks/shares profits etc the appropriate figure is nett of fees/charges. Does anyone know if the Bank interpretation is correct ???

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  • eskbankereskbanker Forumite
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    How much have you paid into your S&S ISA this tax year, and how do 'associated charges' (for what transaction?) affect this? Puzzled by your reference to protecting an interest rate too?
  • Thanks for your interest. I merely switched ordinary shares in to a Stocks/Shares ISA. The total cost to purchase the ISA shares was £19886.75 plus £100 stamp duty and £10.50 dealing fee i.e. total £19997.25. I am making the point that I should still have just over £100 to put in to my Loyalty Isa as the additional £110.50 were charges and did not go in to the ISA account. The Bank states that the charges form part of the contribution. I disagree. I need to make a small cash transfer in to the ISA for the current tax year otherwise my interest rate drops from 0.85% to 0.35%. This is a so called Loyalty ISA and I have been a customer for over 50 years !!!!
  • eskbankereskbanker Forumite
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    Unfortunately, even though you may see it as switching shares into an ISA, it's actually three essentially independent transactions, even though they may have been packaged up as 'Bed & ISA':
    1. Sell shares outside ISA
    2. Move money from outside to inside ISA
    3. Buy shares within ISA
    At HMRC's insistence, it's the quantity involved in step 2 that counts towards the £20K annual ISA contribution limit, even though some of that money may not ultimately end up being invested once there, because of being needed to settle (re)purchase transaction costs. So, if you actually paid £19997.25 into the ISA at step 2 then you do only have £2.75 of your annual limit left, regardless of the fact that the cost of the shares themselves was only £19886.75 once the larger sum was within the ISA.

    If it's any consolation, I'm in exactly the same boat, having paid exactly £20K into a S&S ISA this tax year but 'only' being able to buy £19,9nn worth of funds (#firstworldproblems).

    On the subject of the HSBC Loyalty ISA and preserving your interest rate, does paying in £2.75 qualify?
  • Sea_ShellSea_Shell Forumite
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    Our Fidelity ISA works in much the same way. We have deposited the full amount, but had to ensure that if we didn't want units sold to pay the fees, we had to calculate roughly what the fees would be until the end of the tax year, and hold that amount back from investing in funds.

    I'm not sure which is the best way of doing it, tbh, maybe we'd be better to invest everything, and let them sell units...??
    "It's time to start digging up those Squirrelled Nuts"!!!

  • eskbankereskbanker Forumite
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    Sea_Shell wrote: »
    Our Fidelity ISA works in much the same way. We have deposited the full amount, but had to ensure that if we didn't want units sold to pay the fees, we had to calculate roughly what the fees would be until the end of the tax year, and hold that amount back from investing in funds.

    I'm not sure which is the best way of doing it, tbh, maybe we'd be better to invest everything, and let them sell units...??
    Some S&S ISA providers allow the payment of fees to be from outside the ISA itself, or at least did last year when I looked into it, see https://forums.moneysavingexpert.com/showthread.php?p=74438914#post74438914
  • Thanks. Yes you have explained the procedure as per Bank advice i.e. as far as HMRC are concerned they work on the figure of £20k I introduced from a non-ISA account. Common sense would suggest the relevant amount is the ISA shares you buy, but I was told thats the way it is. So in their eyes I have used the full 20k. Thanks again.
  • eskbanker wrote: »
    Some S&S ISA providers allow the payment of fees to be from outside the ISA itself, or at least did last year when I looked into it, see https://forums.moneysavingexpert.com/showthread.php?p=74438914#post74438914

    HL certainly do. This is just for account-level fees though - transaction charges have to come from the ISA itself as you say in post #4.
  • jimjamesjimjames Forumite
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    Thanks. Yes you have explained the procedure as per Bank advice i.e. as far as HMRC are concerned they work on the figure of £20k I introduced from a non-ISA account. Common sense would suggest the relevant amount is the ISA shares you buy, but I was told thats the way it is. So in their eyes I have used the full 20k. Thanks again.

    It's not really. Common sense would suggest that the important amount is what you pay into the ISA. What you do after that is down to you. Buy 2 different lots of shares and you have 2 sets of costs. Buy & sell repeatedly and more costs. It doesn't matter as the amount paid in is what counts.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • reeacreeac Forumite
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    Common sense, to me, would be that the £20k per annum limit should apply to the amount of money ending up being sheltered from tax ie. excluding the fees involved during the transaction.
  • eskbankereskbanker Forumite
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    reeac wrote: »
    Common sense, to me, would be that the £20k per annum limit should apply to the amount of money ending up being sheltered from tax ie. excluding the fees involved during the transaction.
    The annual ISA allowance has always related to the amount subscribed/contributed/paid in during any given tax year, rather than considering what happens to it after that, whichever variant of ISA it is, so there's no valid reason why a S&S ISA in particular should be granted some sort of exemption from this....
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