S&S ISA Mess/Confusion - Clarification requested!

Tical

Greetings,

I was wondering if the good folk here could help me clear up and clarify my situation.

I was always under the impression that you were only able to open up one S&S ISA per year.  A few years ago when my daughter was born I set up a S&S ISA that I was paying into monthly, on her behalf – I knew about Junior ISAs but didn’t want to hand over the “keys” to the savings when she turns 18 – if I’d been given a lump sum at that age I doubt I’d have used it wisely in any form.  So my plan was to keep it going until she was 21.

So anyway, fast forward a few years and I open up a vanguard S&S ISA for myself that I put funds into every few months or so.

Now I am looking to invest some money in other funds within a S&S ISA in order to diversify, and here’s where it gets confusing.

So I have since read up and it seems you are only allowed to open up and invest in one single S&S ISA in any given year at any one time.  So if I have this right, that means that I can only invest in my Vanguard S&S ISA, be it this year or next, since I am not allowed to contribute to both that and a different one at the same time.  On the face of it this seems like a terrible system, as it completely removes my ability to invest in anything other than the Vanguard S&S ISA, with the only alternative being to abandon putting any funds in it for a year and open up a different S&S ISA and contribute solely to that for a year, and so on and so forth.  On that basis I am really struggling to see how I am supposed to build up a good savings portfolio with any meaningful contributions to any individual one in any respectable duration of time.

So I’m really frustrated by all this at the moment as it seems you’re forced to throw all your eggs in one basket and hope for the best, I can’t see where the option to diversify is and pretty much baffled by the fanfare of S&S ISAs as a whole if you can only ever invest in one single thing in any given year, with the only alternative being to invest in stocks outright and leave any profits/dividends at the mercy of being slaughtered by taxes, to the point I might as well just chuck the money on the roulette table.

I already have a mortgage so a LISA is of no utility to me as an alternative.

So any clarification on this matter would be greatly appreciated as I’m really not seeing the point in bothering at all at this moment in time.

Also in light of this information it seems I am already breaking the rules by contributing both to the original S&S ISA as well as my Vanguard S&S ISA in the same year – not sure what the repercussions of that are, but obviously will put a stop to it immediately.  I figure the only resolution to that would be to suck it up and open a Junior ISA for my daughter – if this is the case is it feasible to transfer the existing S&S ISA that I originally opened for the purpose of saving on her behalf to a Junior ISA?  Or would I have to open one and then withdraw the funds from the S&S ISA and then deposit them into the Junior ISA?

Thanks!

fiisch

You are correct - you can only invest in one S&S ISA per year.
To diversify your investments, you can open an S&S ISA with a provider who offers multiple funds - you can have multiple funds within a single ISA, and invest in multiple funds in a single ISA in any given you.  An example would be Hargreaves Lansdown.
If you want to invest in separate ISAs for you and your daughter, you would need to withdraw your "daughter's" ISA and open a new JISA (the limits on JISAs are about £4k per year, so a lot less than a full fat version).

Tical

Right, I see.

So, my "daughters" S&S ISA is with Charles Stanley Direct, whereas my own personal Vanguard S&S ISA is with Vanguard directly themselves - would it then be an idea to transfer the Vanguard S&S into my Charles Stanley S&S such that I am then able to contribute to that fund whilst also having the option to invest in other funds as well?

Thanks,

bowlhead99

Tical said:

Right, I see.

So, my "daughters" S&S ISA is with Charles Stanley Direct, whereas my own personal Vanguard S&S ISA is with Vanguard directly themselves - would it then be an idea to transfer the Vanguard S&S into my Charles Stanley S&S such that I am then able to contribute to that fund whilst also having the option to invest in other funds as well?

Thanks,

Really it depends whether you want to invest in more than just Vanguard funds. Vanguard don't offer every possible type of fund and won't be the best choice in every specialist area, but they have enough to build a straightforward portfolio of funds in whatever proportions you want, or you can pick one of their mixed asset funds that maintains the allocations for you (eg their LifeStrategy range).

You were quite happy just investing your 'own' money in just  vanguard funds up to now, so while it would be 'an idea' to do your own investing at CS Direct instead, to get access to a broader set of options, it may not really be necessary. Still , some people (self included) would prefer the thousands of options available at Charles Stanley for not much extra platform fee.

If you're reluctant to open a JISA for your child (because of the 'access at 18' issue that you're not comfortable with), it could be a quite sensible option to just move all your Vanguard ISA over to CSD, and just have one big combined pot of investments containing your 'own' money together with the money you're earmarking for your daughter. To keep it simple you could just have (e.g.) an HSBC fund for her and a Vanguard one for her. As long as you know which fund(s) you are buying for her, won't be too complicated.

Keep_pedalling

bowlhead99 said:

Tical said:

Right, I see.

So, my "daughters" S&S ISA is with Charles Stanley Direct, whereas my own personal Vanguard S&S ISA is with Vanguard directly themselves - would it then be an idea to transfer the Vanguard S&S into my Charles Stanley S&S such that I am then able to contribute to that fund whilst also having the option to invest in other funds as well?

Thanks,

Really it depends whether you want to invest in more than just Vanguard funds. Vanguard don't offer every possible type of fund and won't be the best choice in every specialist area, but they have enough to build a straightforward portfolio of funds in whatever proportions you want, or you can pick one of their mixed asset funds that maintains the allocations for you (eg their LifeStrategy range).

You were quite happy just investing your 'own' money in just  vanguard funds up to now, so while it would be 'an idea' to do your own investing at CS Direct instead, to get access to a broader set of options, it may not really be necessary. Still , some people (self included) would prefer the thousands of options available at Charles Stanley for not much extra platform fee.

If you're reluctant to open a JISA for your child (because of the 'access at 18' issue that you're not comfortable with), it could be a quite sensible option to just move all your Vanguard ISA over to CSD, and just have one big combined pot of investments containing your 'own' money together with the money you're earmarking for your daughter. To keep it simple you could just have (e.g.) an HSBC fund for her and a Vanguard one for her. As long as you know which fund(s) you are buying for her, won't be too complicated.

I can think of one good reason to keep the funds separate, and that is to simplify leaving this one specific asset to a child in your will in case you don’t make it to their 21st birthday.

eskbanker

The relevant rules are that you can only pay new money into one S&S ISA in any given tax year and that all current year contributions need to be kept together.

However, there's nothing stopping you from having multiple S&S ISAs open and selectively feeding one from the other once in the next tax year when the money concerned is no longer current year money.  Put both your and daughter's contributions into your Vanguard ISA, and then after 6 April, transfer the latter into a CSD ISA (without compromising your ability to pay 2020/21 money into Vanguard). Rinse and repeat next year and so on....

The only minor caveat is that not all ISA providers allow partial transfers, so you'd need to check that you use ones that do.

colsten

If you want to stick money into both, your "daughter's" and your own ISA, you could open a cash ISA for your daughter's money this tax year, and then transfer it to the CS ISA next tax year.  If you open the cash ISA in March, you can transfer it to the CS ISA after April 5, so the money doesn't have to linger in the cash ISA for long. Just make sure you ask CS to make the transfer, don't do it yourself.

You can put a total of £20K each tax year into the cash ISA and into your own Vanguard ISA. The transfer of your daughter's money from cash to S&S does not count towards the £20K.

Not sure why you are complaining about not being able to diversify - you chose to have your Vanguard Fund on the Vanguard platform. You could have chosen to have the same Fund on a platform which allows thousands of funds.

[Deleted User]

Also, to make things easier you can transfer existing funds to and from every ISA you have, flexibly. Cash to S&S, S&S to another S&S and so on. So you can essentially "deposit " it into Vanguard and have this transferred out to CS straight away, that way you "contribute" to both S&S ISAs in one tax year.

eskbanker

pioruns said:

Also, to make things easier you can transfer existing funds to and from every ISA you have, flexibly. Cash to S&S, S&S to another S&S and so on. So you can essentially "deposit " it into Vanguard and have this transferred out to CS straight away, that way you "contribute" to both S&S ISAs in one tax year.

No, you can't, that would breach the rule about keeping all current year contributions (to one ISA type) together....

[Deleted User]

eskbanker said:

pioruns said:

Also, to make things easier you can transfer existing funds to and from every ISA you have, flexibly. Cash to S&S, S&S to another S&S and so on. So you can essentially "deposit " it into Vanguard and have this transferred out to CS straight away, that way you "contribute" to both S&S ISAs in one tax year.

No, you can't, that would breach the rule about keeping all current year contributions (to one ISA type) together....

Oh my apologies.

I thought that you can transfer from Cash to S&S, and deposit new funds to S&S in the same tax year. I didn't mean that you transfer to Cash ISA and deposit new funds to S&S (two different types in the same tax year). Can you do that?

If yes, can you deposit into Vanguard and transfer from Vanguard to CS in same year?

eskbanker

pioruns said:

eskbanker said:

pioruns said:

Also, to make things easier you can transfer existing funds to and from every ISA you have, flexibly. Cash to S&S, S&S to another S&S and so on. So you can essentially "deposit " it into Vanguard and have this transferred out to CS straight away, that way you "contribute" to both S&S ISAs in one tax year.

No, you can't, that would breach the rule about keeping all current year contributions (to one ISA type) together....

I thought that you can transfer from Cash to S&S, and deposit new funds to S&S in the same tax year.

Only if the cash to S&S transfer is of prior year money, not current year.  Edit: your phrasing actually encompasses various scenarios so the complete answer is more complex.  You can transfer current year money from cash to S&S but only as long as it's all current year money, and only if you haven't already paid into another S&S ISA.  And once you've made a legitimate transfer into a S&S ISA you can make further new payments into it if you haven't paid new money into another S&S ISA in the current year!

pioruns said:

I didn't mean that you transfer to Cash ISA and deposit new funds to S&S (two different types in the same tax year). Can you do that?

You can pay new money into one ISA of each type in any tax year, so you can pay into a cash ISA and a S&S ISA.

pioruns said:

If yes, can you deposit into Vanguard and transfer from Vanguard to CS in same year?

Only if you keep all current year S&S ISA contributions in the same place, i.e. you can't split out a portion of this year's money and transfer that to another ISA of the same type.