Where do iweb take fees from

masonic

Brian65 wrote: »

Well if that is the case whats to stop you adding more than the ISA allowance to pay the fund management fees, trading costs, and every other cost?

The answer to that question should be obvious. The platform must prevent you paying in more than £20k per tax year into your S&S ISA, and HMRC will take action against those who pay more than £20k per tax year across all ISAs.

There is, as londoninvestor points out, nothing that requires fees to be taken from within any specific account, but if they are taken from within your S&S ISA, that does not reduce the amount you've subscribed to the ISA.

Brian65

masonic wrote: »

The platform must prevent you paying in more than £20k per tax year into your S&S ISA,

How can they when they don't know what you have paid into other ISA's

Alexland

Brian65 wrote: »

How can they when they don't know what you have paid into other ISA's

The platform know that £20k is the absolute limit (unless you have additional permitted subscriptions) however it is for HMRC to determine if you have contributed above £20k across all your ISA accounts.

Alex

Chickereeeee

Alexland wrote: »

The platform know that £20k is the absolute limit (unless you have additional permitted subscriptions) however it is for HMRC to determine if you have contributed above £20k across all your ISA accounts.

Alex

You cannot contribute to more than one of the same type of ISA in a year. And (in my experience) HMRC notice pretty quickly if you accidentally do more than one.

Alexland

Chickereeeee wrote: »

You cannot contribute to more than one of the same type of ISA in a year. And (in my experience) HMRC notice pretty quickly if you accidentally do more than one.

Yup HMRC would spot that too.

masonic

Brian65 wrote: »

How can they when they don't know what you have paid into other ISA's

All ISA managers make an annual return to HMRC, reporting the amount subscribed by each of their customers. HMRC just needs to add this up for the individual. They can do this and we know that they do, because we hear from people who have been notified that they have oversubscribed in a previous tax year and that their ISA needs to be repaired or voided.

Brian65

masonic wrote: »

All ISA managers make an annual return to HMRC, reporting the amount subscribed by each of their customers. HMRC just needs to add this up for the individual. They can do this and we know that they do, because we hear from people who have been notified that they have oversubscribed in a previous tax year and that their ISA needs to be repaired or voided.

Yes realise that. HMRC would know. But not the platform unless you are paying it all in to them. So I can't see how ' The platform must prevent you paying in more than £20k per tax year into your S&S ISA,' as you said.
And I can't see what is stopping you paying over the limit to cover fees if they can be paid separately without using ISA money. Never tried it though because I was told by a broker's clerk their fees had to be paid out of ISA money. Of course he might have been wrong.

masonic

Brian65 wrote: »

Yes realise that. HMRC would know. But not the platform unless you are paying it all in to them. So I can't see how ' The platform must prevent you paying in more than £20k per tax year into your S&S ISA,' as you said.

So you don't understand how "The platform must prevent you paying in more than £20k per tax year into your S&S ISA"

Let me try and break it down so you may understand. Alexland has already attempted to cover the scenario of "paying in more than £20k per tax year into your S&S ISA" in post #14, but I guess you couldn't follow his explanation.

1) A S&S ISA is an account that is held on a single platfform. So, you can have a S&S ISA with iWeb, or with HL, or with CSD, etc. S&S ISA accounts are not shared between multiple providers, so you cannot have a S&S ISA that's part-managed by iWeb and part-managed by HL. You'd need multiple accounts for that and so it wouldn't be the singular "S&S ISA".
2) iWeb can see how much you pay into your S&S ISA, because it processes your payment and credits the money to your S&S ISA
3) iWeb keeps a running total of how much you have paid in each tax year
4) If you try to make a new payment into your S&S ISA, iWeb will perform the calculation:
Total already subscribed + New payment
5) If the calculation in (3) is greater than £20,000, iWeb will not let you do it.

So, as I said, the platform can "prevent you paying in more than £20k per tax year into your S&S ISA", very easily.

iWeb, and other ISA managers are required to do the above by HMRC. It is not optional.

And I can't see what is stopping you paying over the limit to cover fees if they can be paid separately without using ISA money. Never tried it though because I was told by a broker's clerk their fees had to be paid out of ISA money. Of course he might have been wrong.

The limit is stopping you from paying over the limit. That's what "limit" means.

If instead you want to spread your >£20k per tax year between multiple ISAs, the providers will not spot this unless you pay in >£20k with any single provider, but there will be consequences to doing so, as discussed above.

Brian65

masonic wrote: »

So you don't understand how "The platform must prevent you paying in more than £20k per tax year into your S&S ISA"

Let me try and break it down so you may understand. Alexland has already attempted to cover the scenario of "paying in more than £20k per tax year into your S&S ISA" in post #14, but I guess you couldn't follow his explanation.

1) A S&S ISA is an account that is held on a single platfform. So, you can have a S&S ISA with iWeb, or with HL, or with CSD, etc. S&S ISA accounts are not shared between multiple providers, so you cannot have a S&S ISA that's part-managed by iWeb and part-managed by HL. You'd need multiple accounts for that and so it wouldn't be the singular "S&S ISA".
2) iWeb can see how much you pay into your S&S ISA, because it processes your payment and credits the money to your S&S ISA
3) iWeb keeps a running total of how much you have paid in each tax year
4) If you try to make a new payment into your S&S ISA, iWeb will perform the calculation:
Total already subscribed + New payment
5) If the calculation in (3) is greater than £20,000, iWeb will not let you do it.

So, as I said, the platform can "prevent you paying in more than £20k per tax year into your S&S ISA", very easily.

iWeb, and other ISA managers are required to do the above by HMRC. It is not optional.


The limit is stopping you from paying over the limit. That's what "limit" means.

If instead you want to spread your >£20k per tax year between multiple ISAs, the providers will not spot this unless you pay in >£20k with any single provider, but there will be consequences to doing so, as discussed above.

OK. Well if fees don't have to come out of ISA funds why won't they let you pay all the fund fees separately so they don't come out of your ISA allowance?

bowlhead99

Brian65 wrote: »

Yes realise that. HMRC would know. But not the platform unless you are paying it all in to them. So I can't see how ' The platform must prevent you paying in more than £20k per tax year into your S&S ISA,' as you said.

The platform must prevent you paying in more than £20k into your S&S ISA. That's all they can do and is all that masonic said they must do.

You are only supposed to subscribe to one S&S ISA in a tax year (unless you transfer all the current year contributions
from the first to the second, in which case the second ISA manager has all your current year S&S ISA money and knows how much was subscribed in total for the year). So, an ISA manager looking after 'your S&S ISA' must prevent you paying in more than £20k into 'your S&S ISA', because he controls subscriptions into 'your S&S ISA'.

That is all he can do, and all he is required to do. He is not responsible for monitoring whether you also have a Cash ISA and a LISA etc with money in it which might breach the £20k total, because HMRC is responsible for monitoring that, from the reports they receive.

If you plan to break the rules and contribute to four separate S&S ISAs at £20k each by lying that you haven't already subscribed to an ISA of that type and lying that you won't exceed the annual subscription limit for the year across all your ISAs, then having S&S ISA Manager #1 stop you paying in more than £20k into your S&S ISA I]with him[/I is not going to prevent you breaking the rule. But he is still responsible for making sure you do not subscribe £20,001 into the S&S ISA I]with him[/I, regardless of what you do elsewhere, because £20,001 subscribed to his ISA is a clear breach. HMRC will monitor the aggregate total subscriptions as a backstop for whatever is not picked up as a clear breach.

Similarly if the other 3 ISAs were different ISA types, you are still making a declaration that you are not going over the limit in total across all ISA types, and all the S&S ISA manager can do is make sure that you don't put £20001 in his ISA because it would be a clear breach. HMRC will monitor the aggregate total subscriptions as a backstop for whatever is not picked up as a clear breach.

And I can't see what is stopping you paying over the limit to cover fees if they can be paid separately without using ISA money.

What is stopping you is that the rules say you must not subscribe over £20k across all your ISAs in a tax year and you declare that you have not and will not do that, whenever you open an ISA. If you break the rules, you void your ISA.

As far as HMRC is concerned they do not care if you use ISA money to pay the fees or you make some other arrangement to pay the fees. If you choose to use ISA money to pay fees, you do not magically get given a bigger ISA limit to allow you to do that. You get the same £20k subscription allowance as everyone else, so that the limit can be easily monitored centrally by HMRC without someone in HMRC's office saying "ok the computer says this guy has contributed £20,007.50 so it is a breach, and this guy over here has contributed £20,251.28, but before I get on with the rest of my working day I had better write a letter to each of them and double check whether perhaps that extra money was 'just to pay fees' in which case I will selectively ignore the rules for them. What a faff that would be.

Never tried it though because I was told by a broker's clerk their fees had to be paid out of ISA money. Of course he might have been wrong.

Some ISA managers will have an internal rule that their fees have to be paid out of ISA money. It is easier for them to administer the account. The fact that an ISA manager could take a commercial decision to send you a separate bill which you pay some other way, does not imply that the specific firm with which you were dealing, are willing to do that. If the clerk said that *their* fees had to be paid out of ISA money there is no reason to suspect he is wrong. He is not speaking for all ISA managers in the country.

Brian65 wrote: »

OK. Well if fees don't have to come out of ISA funds why won't they let you pay all the fund fees separately so they don't come out of your ISA allowance?

Because a separate billing process is an extra layer of complexity which costs them money to administer. And customers like cheap fees. If it costs the ISA company £100 a year to run an ISA but £105 to run an ISA with a separate fee billing component outside the ISA, they have a choice to raise the fees or make lower profits. If they raise the fees they may lose more customers than they gain for this 'feature' that the majority of customers do not need because the majority of customers do not exceed their allowances. Only a wealthy few will find it useful to pay the fees from outside the allowances so it is a commercial choice whether to pander to that subset of customers.

If you take fees only from the account:
- is there money in the account? if yes, take it. if not, sell investments, then take it. We get our money within two days of the billing date without argument.

If you take fees by other methods:
- look at the other accounts we administer? Is there money? or can we get it by direct debit? Or did the customer promise to pay us another way? Ok there was not money in the other accounts so let's take by direct debit. Did the direct debit credit our main bank account yet and we match it to the customer record, or did it fail? Have we tried contacting the customer to see if he is going to pay a different way? Ah screw it, the payment is late, let's take the money from the ISA or sell assets from the ISA to get the money. Oh great, now the customer is on the phone complaining that we took money to pay fees from the ISA even though he wanted to do it some other way but blames us for him not having sufficient funds in his other account on the due date. He is petulant and will spend all day banging on about it if we let him. Shall we give him a few quid for the 'inconvenience caused'?