Flexible ISA and offset mortgage

NottinghamKnight

Imelda said:

NottinghamKnight said:

Imelda said:

@NottinghamKnight the long term plan is to shift the cash into S&S ISAs. We have been paying all of our "new" ISA money into S&S ISAs for the past 4 years. Getting my husband to do this has been a difficult task - he is ridiculously risk averse.
Do you know when repaying the money into the flexible ISA whether the old allowance will be filled first or will the first £20k be considered "new" and use the current year's allowance? I want the £20k of new allowance to go into S&S ISA but I assume I could put it into the cash one and then transfer out to make sure?

That's a hell of a cost in terms of investment returns lost over the last few years. There is no difference in what you can invest in between isas and pensions, so maxing pension contributions is normally wise, especially as there s an immediate tax uplift of at least 20% and potentially over 50%. If you want to retain access then a general investment account (GIA) is the unwrapped version, potentially taxable but the first £2k of dividends are tax free (zero rated) and there is a £12.5k cgt allowance every year before you have o pay any tax in investment capital growth that is realised.

Like I said - my husband is very risk averse and it is impossible to get him to agree to putting more into S&S.

We maximise pensions - my husband is able to contribute £10k a year, I put my full salary in plus a LISA (husband too old).

Assuming that is a dc pension then the worrying thing is that the money going into his pension is probably invested in a default account, with poor returns and overweight uk, he really needs to educate himself as it is costing him a lot of money.

Imelda

NottinghamKnight said:

Imelda said:

NottinghamKnight said:

Imelda said:

@NottinghamKnight the long term plan is to shift the cash into S&S ISAs. We have been paying all of our "new" ISA money into S&S ISAs for the past 4 years. Getting my husband to do this has been a difficult task - he is ridiculously risk averse.
Do you know when repaying the money into the flexible ISA whether the old allowance will be filled first or will the first £20k be considered "new" and use the current year's allowance? I want the £20k of new allowance to go into S&S ISA but I assume I could put it into the cash one and then transfer out to make sure?

That's a hell of a cost in terms of investment returns lost over the last few years. There is no difference in what you can invest in between isas and pensions, so maxing pension contributions is normally wise, especially as there s an immediate tax uplift of at least 20% and potentially over 50%. If you want to retain access then a general investment account (GIA) is the unwrapped version, potentially taxable but the first £2k of dividends are tax free (zero rated) and there is a £12.5k cgt allowance every year before you have o pay any tax in investment capital growth that is realised.

Like I said - my husband is very risk averse and it is impossible to get him to agree to putting more into S&S.

We maximise pensions - my husband is able to contribute £10k a year, I put my full salary in plus a LISA (husband too old).

Assuming that is a dc pension then the worrying thing is that the money going into his pension is probably invested in a default account, with poor returns and overweight uk, he really needs to educate himself as it is costing him a lot of money.

It is worse than that. Far worse. He moved his whole pension into cash in February and I am pretty sure that is where it will stay. He has no strategy for getting back into the market.
He refuses to see an IFA. He is an accountant and so thinks he knows best.
Don't get me started it makes me so annoyed. I can't make him do it, I can only make sure I invest what I can.

Imelda

I just asked him - his S&S ISA is sitting in cash too. I mentioned an IFA and he has stormed out. So that went well.

NottinghamKnight

Imelda said:

I just asked him - his S&S ISA is sitting in cash too. I mentioned an IFA and he has stormed out. So that went well.

You have my sympathies and apologies for potentially causing the argument. My missus says that my arrogance is often annoying but I try and base my thinking on reason and research, diplomacy is a major failing and never perfect even occasionally wrong (apparently).

Imelda

It is just very frustrating as I think he could benefit so much from some proper advice and a proper financial plan - he could retire far earlier for a start.

csgohan4

Imelda said:

It is just very frustrating as I think he could benefit so much from some proper advice and a proper financial plan - he could retire far earlier for a start.

sometimes all you can do is advise, he is an adult as well and sadly if that means making mistakes, even costly ones then so be it.  You've tried your best, but if he is happy with a pension pot that is being eroded by inflation, that's his choice. 

Alexland

Imelda said:

Does Virgin consider the money you put back your "old" allowance that you are repaying? 

All flexible ISA providers should be using up the old withdrawn allowance first see below

https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#f-isa

"Where a withdrawal is made, any subsequent subscriptions in the same tax year that would otherwise count towards the subscription limit will do so only to the to the extent that previously withdrawn amounts have been fully replaced."

Imelda

Perfect, thanks everyone.

Cus

Imelda said:

NottinghamKnight said:

Imelda said:

@NottinghamKnight the long term plan is to shift the cash into S&S ISAs. We have been paying all of our "new" ISA money into S&S ISAs for the past 4 years. Getting my husband to do this has been a difficult task - he is ridiculously risk averse.
Do you know when repaying the money into the flexible ISA whether the old allowance will be filled first or will the first £20k be considered "new" and use the current year's allowance? I want the £20k of new allowance to go into S&S ISA but I assume I could put it into the cash one and then transfer out to make sure?

That's a hell of a cost in terms of investment returns lost over the last few years. There is no difference in what you can invest in between isas and pensions, so maxing pension contributions is normally wise, especially as there s an immediate tax uplift of at least 20% and potentially over 50%. If you want to retain access then a general investment account (GIA) is the unwrapped version, potentially taxable but the first £2k of dividends are tax free (zero rated) and there is a £12.5k cgt allowance every year before you have o pay any tax in investment capital growth that is realised.

Like I said - my husband is very risk averse and it is impossible to get him to agree to putting more into S&S.

We maximise pensions - my husband is able to contribute £10k a year, I put my full salary in plus a LISA (husband too old).

You mentioned £10k a year. As this was the figure for the old minimum annual allowance (full taper) I thought I should highlight that taper rules changes earlier this year and the minimum is now £4k.
Apologies if you know this and it's a coincidence that your husband earns exactly £300k a year now to effect a taper to £10k under the new rules.

NottinghamKnight

Cus said:

Imelda said:

NottinghamKnight said:

Imelda said:

@NottinghamKnight the long term plan is to shift the cash into S&S ISAs. We have been paying all of our "new" ISA money into S&S ISAs for the past 4 years. Getting my husband to do this has been a difficult task - he is ridiculously risk averse.
Do you know when repaying the money into the flexible ISA whether the old allowance will be filled first or will the first £20k be considered "new" and use the current year's allowance? I want the £20k of new allowance to go into S&S ISA but I assume I could put it into the cash one and then transfer out to make sure?

That's a hell of a cost in terms of investment returns lost over the last few years. There is no difference in what you can invest in between isas and pensions, so maxing pension contributions is normally wise, especially as there s an immediate tax uplift of at least 20% and potentially over 50%. If you want to retain access then a general investment account (GIA) is the unwrapped version, potentially taxable but the first £2k of dividends are tax free (zero rated) and there is a £12.5k cgt allowance every year before you have o pay any tax in investment capital growth that is realised.

Like I said - my husband is very risk averse and it is impossible to get him to agree to putting more into S&S.

We maximise pensions - my husband is able to contribute £10k a year, I put my full salary in plus a LISA (husband too old).

You mentioned £10k a year. As this was the figure for the old minimum annual allowance (full taper) I thought I should highlight that taper rules changes earlier this year and the minimum is now £4k.
Apologies if you know this and it's a coincidence that your husband earns exactly £300k a year now to effect a taper to £10k under the new rules.

Able to contribute may well mean available funds rather than a legal restriction. If the husband is earning £300k a year then there is sufficient excess income and capital to solve most problems.