Isa or Sipp at 55 years old

archparch1

Hi All, I am 55 and at present trade shares (resonably succesfully) on an online platform. I realise however that I am not getting any tax breaks that could be offered by an ISA or a SIPP. I am trying to work out whether I shoudl transfer the shares and any future trading into an ISA or SIPP but am confused by all the (often conflicting) advice out there. Any advice from anyone on the board?

eskbanker

An ISA is likely to be more tax-efficient than a general investment account, if your trading activity gives rise to either annual capital gains tax liabilities of over £12K or annual dividend income above £2K, or is likely to do so in the foreseeable future.

A SIPP might also be an option but is likely to be more complicated - there is tax relief on money going into a SIPP but it's also mostly taxed on the way out again and may be more expensive to run than a S&S ISA. Does your preferred platform offer ISAs and SIPPs and have you examined their charges, or would you be considering other platforms?

Both have restrictions on what can be paid in during a tax year - what sort of size of pot are you talking about?

archparch1

Thanks for that Eskbanker. I think an ISA is probably best for me, I can put 20k in now for this year. I may well have more than that to go in so I will look at a SIPP as well.

Albermarle

so I will look at a SIPP as well.

To gain the tax relief above a minimum amount when you pay into a SIPP , you need to have some earned taxable income . If you are not employed/earning a salary then a SIPP is probably not the best option for what you want .
If you are earning a salary it is probably the better option.

archparch1

Thanks Albermarle. I am paying tax on a salary so any excess going into a SIPP should be fine. I assume that the percentage of my salary that I put into an ISA doesn't impact the tax releif on other salary going into a SIPP? What I mean is that I am a higher rate tax payer on my salary, but when I take off that amount I will putting into my ISA it will drop me into the lower rate, si I assume I will still get the higher rate as tax releif.

AnotherJoe

What you put into a ISA has no relevance to any other tax issues such as SIPPs.
However as you are a high rate tax payer you should definitely strongly consider SIPP before ISA.
Say you have £10k to put into one or other?

Place that £10k in a ISA you have £10k in an ISA>
Place that £10k into a SIPP, get £12,500 in a SIPP and later £2500 off your tax bill. (in your tax return you'd put down that you added £12,500 into your SIPP)

Albermarle

As above . For anyone who is a higher rate taxpayer in employment and is likely to be a basic rate taxpayer in retirement then contributing to a pension is a no brainer.
Remember though you can not get more higher rate relief than you have actually paid during the tax year.
As a secondary point not many people on this forum would recommend you using your pension for trading shares . More long term diversified investments are usually the recommendation.

cloud_dog

Albermarle wrote: »

As a secondary point not many people on this forum would recommend you using your pension for trading shares . More long term diversified investments are usually the recommendation.

I don't have a problem with it.

This is money the OP would use to trade so therefore whether it is done in a GIA, ISA, or a SIPP is irrelevant; the SIPP is just a tax efficient wrapper and the OP is not intending (I hope) to gamble with their actual pension. :eek:

Albermarle

with their actual pension

The OP never mentioned an 'actual pension ' separate from their trading activity , so not sure what their position is .