ISA or GIA

Tuffers13

Hi there , I just wanted to ask people’s opinion on whether you would suggest an ISA or GIA for investing into funds or stock markets . Clearly ISA accounts have tax benefits CGT etc over GIA ,but would people still recommend setting up an ISA , if I was looking leave investments
in there for a few years. The answer will depend on different circumstances I get , but I was curious on what the opinion was of others . I have both ISA and GIA but contemplating moving all into one . 

Any thoughts or advice would be greatly
appreciate
Wayne  

AlanP_2

ISA, if a pension isn't an option, and avoid any possibilty of income or capital gains tax.

How long is a "few years" and is there a fixed deadline when you "must sell" and have the cash? 

Tuffers13

AlanP_2 said:

ISA, if a pension isn't an option, and avoid any possibilty of income or capital gains tax.

How long is a "few years" and is there a fixed deadline when you "must sell" and have the cash? 

Hi Alan , one of the reasons that I can think of not having an ISA would be if you are nowhere near the CGT limit ? If you were investing small ? What you do think ? 

A few years would be 3-5 years 

I’ve not looked into pension , I already have a pension with my employer . 

I assume GIA are a non starter for you ? 

AlanP_2

in my opinion a GIA is for anything left over after ISA and pension has been fully utilised and as I am nowhere near that position, yes, they are a non-starter for me.

3-5 years for investments is a short timescale, how would you feel if you had invested in 2017 and then cashed up in March 2020? The longer it is in there the greater the cahnce of getting a positive return.

ColdIron

The ISA is a no brainer. Even if you are nowhere near the CGT threshold you will need to keep detailed records to prove it if challenged by HMRC, and don't forget your dividends

I have both ISA and GIA but contemplating moving all into one .

Then you should move your GIA into the ISA within the limits of your annual allowance

Several years ago people said there was no point in using an ISA for shares as the dividends were not taxed for basic rate taxpayers, until they were. Don't discount future changes in legislation

What advantage do you see in not using a tax privileged account?

grumiofoundation

ColdIron said:

The ISA is a no brainer. Even if you are nowhere near the CGT threshold you will need to keep detailed records to prove it if challenged by HMRC, and don't forget your dividends

I have both ISA and GIA but contemplating moving all into one .

Then you should move your GIA into the ISA within the limits of your annual allowance

Several years ago people said there was no point in using an ISA for shares as the dividends were not taxed for basic rate taxpayers, until they were. Don't discount future changes in legislation

What advantage do you see in not using a tax privileged account?

 Thats the key - there may be no (perceived) advantage to using ISA, but there is no downside either (edit - maybe fees with some brokers)- so why not just use ISA?

Tuffers13

ColdIron said:

The ISA is a no brainer. Even if you are nowhere near the CGT threshold you will need to keep detailed records to prove it if challenged by HMRC, and don't forget your dividends

I have both ISA and GIA but contemplating moving all into one .

Then you should move your GIA into the ISA within the limits of your annual allowance

Several years ago people said there was no point in using an ISA for shares as the dividends were not taxed for basic rate taxpayers, until they were. Don't discount future changes in legislation

What advantage do you see in not using a tax privileged account?

The only advantage for GIA is account fees with the choosen broker/platform. Unless I am looking in the wrong place , ISA accounts looks
a bit more expensive than GIA ? But I guess saving on a potential CGT liability is better than saving on GIA account fees. 

Alexland

Yes some platforms have higher charges for ISAs over GIAs for example Freetrade at £3/month or HL who charge 0.45% custody on shares (capped at £45) but generally speaking unless you are using one of those platforms (in which case it needs some consideration based on your specific investment situation) it's always going to be better to use any available ISA allowance provided you don't break the rule of contributing into more than one S&S ISA in each tax year. If you already have a GIA it might need some consideration on how you transition into ISA land without incurring unnecessary tax or cost implications.

Tuffers13

Alexland said:

Yes some platforms have higher charges for ISAs over GIAs for example Freetrade at £3/month or HL who charge 0.45% custody on shares (capped at £45) but generally speaking unless you are using one of those platforms (in which case it needs some consideration based on your specific investment situation) it's always going to be better to use any available ISA allowance provided you don't break the rule of contributing into more than one S&S ISA in each tax year. If you already have a GIA it might need some consideration on how you transition into ISA land without incurring unnecessary tax or cost implications.

Currently I have my GIA with HL and ISA with Vanguard . Most of my GIA is in blue chips and index funds make up my vanguard account . I don’t think Vanguard allow equities or maybe I have read that wrong somewhere . HL are good but a bit expensive with ISA. I would prefer to stay with reputable firms that I know of. 

ColdIron

Tuffers13 said:

Alexland said:

Yes some platforms have higher charges for ISAs over GIAs for example Freetrade at £3/month or HL who charge 0.45% custody on shares (capped at £45) but generally speaking unless you are using one of those platforms (in which case it needs some consideration based on your specific investment situation) it's always going to be better to use any available ISA allowance provided you don't break the rule of contributing into more than one S&S ISA in each tax year. If you already have a GIA it might need some consideration on how you transition into ISA land without incurring unnecessary tax or cost implications.

Currently I have my GIA with HL and ISA with Vanguard . Most of my GIA is in blue chips and index funds make up my vanguard account . I don’t think Vanguard allow equities or maybe I have read that wrong somewhere . HL are good but a bit expensive with ISA. I would prefer to stay with reputable firms that I know of. 

Some platforms do have ISA charges, of the mainstream providers I can think of Halifax Share Dealing is £12.50 and Freetrade is £36. Others waive their annual percentage fee for their GIA and have caps in their ISA, HL and Fidelity at £45, but this only applies to shares, ITs and ETFs and not funds

Your Vanguard funds are probably best left with Vanguard Investor unless the sums are large and your trading frequency very low. Your shares would cost a bit more in an HL ISA but limited to £45 due to the cap, any funds would cost the same

For me I would take the tax protection and lack of record keeping of an ISA over some small extra cost in fees, perhaps run your numbers and see what the actual savings would be. £45 pa (assuming you have £10,000+ in shares) is the cost of a large cappuccino a month

Alexland

Tuffers13 said:

Currently I have my GIA with HL and ISA with Vanguard . Most of my GIA is in blue chips and index funds make up my vanguard account . I don’t think Vanguard allow equities or maybe I have read that wrong somewhere . HL are good but a bit expensive with ISA. I would prefer to stay with reputable firms that I know of. 

Maybe find a platform that is good for both funds and shares with no ongoing fee for holding an ISA such as iWeb (run by Halifax) if they offer the investments you are interested in? At £5 per fund/share trade it's much cheaper for share trading that HL but unlike Vanguard you would start paying trade cost for funds. Also consider that you would need to sell your shares and repurchase to get them into an ISA wrapper with associated trade, stamp duty and market spread costs. Or easier just give up on the share trading....