AJ Bell Youinvest - Pay custody charge from dealing account

jsinc

For SIPP, ISA, LISA, Junior ISA, Junior SIPP

https://www.youinvest.co.uk/faq/how-are-charges-collected

https://www.youinvest.co.uk/faq/can-i-pay-charges-outside-my-sipp etc

Just noticed. Pretty sure this option wasn't offered previously.

bowlhead99

You're right, I don't think that option used to be there. 

Might be useful for people who want to max out their ISA investments rather than keep any spare cash in the account for fees.

You would of course be crazy to pay for SIPP custody with cash from an account outside the pension, given that if you first contribute it to a pension it would receive tax relief making the effective cost of the custody charge some 20-60% lower depending on your marginal tax rate.

jsinc

bowlhead99 said:

You would of course be crazy to pay for SIPP custody with cash from an account outside the pension, given that if you first contribute it to a pension it would receive tax relief making the effective cost of the custody charge some 20-60% lower depending on your marginal tax rate.

Good point on SIPP. Seems obvious now you mention it but I hadn't thought of that.

pafpcg

From one of the AJBell documents: "But you do need to keep enough cash in your account to cover your quarterly custody charges."

Has there been a policy change?  Ever since I opened my SIPP a few years back, the quarterly charge would always send the cash account negative and stay that way for a couple of months until the next quarterly dividend payment put it back into credit.  AJBell have never complained....

jim1999

bowlhead99 said:

You're right, I don't think that option used to be there. 

Might be useful for people who want to max out their ISA investments rather than keep any spare cash in the account for fees.

You would of course be crazy to pay for SIPP custody with cash from an account outside the pension, given that if you first contribute it to a pension it would receive tax relief making the effective cost of the custody charge some 20-60% lower depending on your marginal tax rate.

Unless you were maxing out your SIPP contributions, I suppose.

Audaxer

bowlhead99 said:

You would of course be crazy to pay for SIPP custody with cash from an account outside the pension, given that if you first contribute it to a pension it would receive tax relief making the effective cost of the custody charge some 20-60% lower depending on your marginal tax rate.

It sounds like a good idea for my wife's SIPP. She has paid in the maximum she can this year and it's invested in a multi asset ACC fund. There is only a little cash left in her SIPP, so when the tax relief is added next month, she would have been investing most of it in the fund, but leaving a bit as cash to cover fees. With this new rule allowing the taking platform fees from a dealing account, surely it would be a better idea to invest all the tax relief in the fund, and open a dealing account putting in cash to cover the fees?

pafpcg

Audaxer said:

bowlhead99 said:

You would of course be crazy to pay for SIPP custody with cash from an account outside the pension, given that if you first contribute it to a pension it would receive tax relief making the effective cost of the custody charge some 20-60% lower depending on your marginal tax rate.

 ............
With this new rule allowing the taking platform fees from a dealing account, surely it would be a better idea to invest all the tax relief in the fund, and open a dealing account putting in cash to cover the fees?

Think of it from the perspective of when your wife will draw the benefits from her SIPP.  Will she be paying income tax on the money when it is withdrawn from the SIPP?  If so, then she'll be paying tax on part of a fund for which she didn't get any tax relief when it was put in, whereas if the money in the dealing account had been invested outside the SIPP, then there'd be no tax to pay on the capital when the investment was sold-off (ignoring CGT & tax on dividends).

Audaxer

pafpcg said:

Audaxer said:

bowlhead99 said:

You would of course be crazy to pay for SIPP custody with cash from an account outside the pension, given that if you first contribute it to a pension it would receive tax relief making the effective cost of the custody charge some 20-60% lower depending on your marginal tax rate.

 ............
With this new rule allowing the taking platform fees from a dealing account, surely it would be a better idea to invest all the tax relief in the fund, and open a dealing account putting in cash to cover the fees?

Think of it from the perspective of when your wife will draw the benefits from her SIPP.  Will she be paying income tax on the money when it is withdrawn from the SIPP?  If so, then she'll be paying tax on part of a fund for which she didn't get any tax relief when it was put in, whereas if the money in the dealing account had been invested outside the SIPP, then there'd be no tax to pay on the capital when the investment was sold-off (ignoring CGT & tax on dividends).

Thankfully she won't be liable for any tax when she draws from her SIPP, so I think it would be beneficial to open a dealing account just to hold some cash for fees?

smokey01

I have recently started paying for my ISA from my dealing account. When I asked them what would happen if I forgot to fund the dealing account I got this response (early December)

‘If there were no available funds in the account when the charges are due, this would then take that account to a negative balance until you disinvest, receive dividends or make a payment in to cover this deficit. There is no charge for being overdrawn, however if this became a significant amount we would then contact you to ask you to make funds available.’

Mr.Saver

Audaxer said:

pafpcg said:

Audaxer said:

bowlhead99 said:

You would of course be crazy to pay for SIPP custody with cash from an account outside the pension, given that if you first contribute it to a pension it would receive tax relief making the effective cost of the custody charge some 20-60% lower depending on your marginal tax rate.

 ............
With this new rule allowing the taking platform fees from a dealing account, surely it would be a better idea to invest all the tax relief in the fund, and open a dealing account putting in cash to cover the fees?

Think of it from the perspective of when your wife will draw the benefits from her SIPP.  Will she be paying income tax on the money when it is withdrawn from the SIPP?  If so, then she'll be paying tax on part of a fund for which she didn't get any tax relief when it was put in, whereas if the money in the dealing account had been invested outside the SIPP, then there'd be no tax to pay on the capital when the investment was sold-off (ignoring CGT & tax on dividends).

Thankfully she won't be liable for any tax when she draws from her SIPP, so I think it would be beneficial to open a dealing account just to hold some cash for fees?

Even she doesn't need to pay income tax in retirement, she still get a 20% off platform fee by paying the charges from the SIPP account rather than the dealing account (general investment account, GIA). Remember, for every £80 she puts in, she will get £100 in the SIPP.

I can't think of any valid case that paying the SIPP platform charges from a GIA is better than from the SIPP.

toothdoctor

Mr.Saver said:

Audaxer said:

pafpcg said:

Audaxer said:

bowlhead99 said:

You would of course be crazy to pay for SIPP custody with cash from an account outside the pension, given that if you first contribute it to a pension it would receive tax relief making the effective cost of the custody charge some 20-60% lower depending on your marginal tax rate.

 ............
With this new rule allowing the taking platform fees from a dealing account, surely it would be a better idea to invest all the tax relief in the fund, and open a dealing account putting in cash to cover the fees?

Think of it from the perspective of when your wife will draw the benefits from her SIPP.  Will she be paying income tax on the money when it is withdrawn from the SIPP?  If so, then she'll be paying tax on part of a fund for which she didn't get any tax relief when it was put in, whereas if the money in the dealing account had been invested outside the SIPP, then there'd be no tax to pay on the capital when the investment was sold-off (ignoring CGT & tax on dividends).

Thankfully she won't be liable for any tax when she draws from her SIPP, so I think it would be beneficial to open a dealing account just to hold some cash for fees?

Even she doesn't need to pay income tax in retirement, she still get a 20% off platform fee by paying the charges from the SIPP account rather than the dealing account (general investment account, GIA). Remember, for every £80 she puts in, she will get £100 in the SIPP.

I can't think of any valid case that paying the SIPP platform charges from a GIA is better than from the SIPP.

is it also best to pay the platform fee for a LISA from the LISA itself or from a dealing account