Do charges count to the overall allowance in a Stocks & Shares ISA?

clivedenman

Hi ... simple question but I've failed to find the answer ... Do the charge for Share Purchases ( ... and Sales ?) count towards to overall allowance ?

eskbanker

If you're referring to the annual £20K allowance then that's a cap on how much you can contribute into the ISA each year - what happens to that money thereafter isn't relevant.  Some platforms will allow you to take such charges from outside your ISA though.

clivedenman

Hi again .. thanks for that .. and sorry if I'm being obtuse but ... real world situation is I've opened a Stocks & Shares ISA and to date spent (approx. numbers) £17300 ... which is actually £17000 worth of share value as at the date of purchase and a further £300 of charges to the platform provider. So do I have £2700 of 'allowance' remaining or can I 'ignore' the charges and spend another £3000's worth of share value. 

I note that you write ... 'Some platforms will allow you to take such charges from outside your ISA ' ... but I assumed that the 'rules' governing my question are covered in some HMRC guidance which I have failed to uncover.

jonesMUFCforever

My thinking is that if you have credited your S&S ISA  with £17300 then the remaining allowance for this tax year is £2700.

eskbanker

clivedenman said:

Hi again .. thanks for that .. and sorry if I'm being obtuse but ... real world situation is I've opened a Stocks & Shares ISA and to date spent (approx. numbers) £17300 ... which is actually £17000 worth of share value as at the date of purchase and a further £300 of charges to the platform provider. So do I have £2700 of 'allowance' remaining or can I 'ignore' the charges and spend another £3000's worth of share value.

The £20K relates to how much you pay into the ISA, not how much you spend once it's in there, but if you've paid £17,300 into the ISA then you can pay in another £2,700.  If, on the other hand, you've paid in £20K (but only spent £17,300 of that) then you can't pay any more in until the next tax year starts, but still have the residual £2,700 available with which to buy more investments.

clivedenman said:

I note that you write ... 'Some platforms will allow you to take such charges from outside your ISA ' ... but I assumed that the 'rules' governing my question are covered in some HMRC guidance which I have failed to uncover.

I suspect that your confusion has arisen from not really appreciating the distinction between paying into a S&S ISA and then investing within it - once you get to grips with that, and the fact that the allowance only relates to the former, then it should all make sense, and any published guidance I've seen makes it clear that the £20K is a contribution allowance.

masonic

Transaction fees, stamp duty etc invariably are charged to the balance of the investment account within which the investments are made. Platform charges can in some cases be paid externally (for example by direct debit), or charged to one of a group of accounts. You may be able to reduce the charges taken from your ISA balance by going with a provider that has relatively higher platform charges, but low or free transaction fees, but in general it is best to go with the provider with the lowest fees regardless of how they are collected.

Alistair31

£300 charge on £17k investment? Sounds like you’re being fleeced. 

Albermarle

Alistair31 said:

£300 charge on £17k investment? Sounds like you’re being fleeced. 

Or buying and selling a lot of different investments ? If you do this for relatively small amounts with some providers then the charges can become significant relative to the overall investment.