Flexible ISA and offset mortgage

Cus

NottinghamKnight said:

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.

True, but I guessed as the husband is a top rate tax payer, and the ISA contribution is maxed out surely the pension contribution would be maxed first.

NottinghamKnight

Cus said:

NottinghamKnight said:

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.

True, but I guessed as the husband is a top rate tax payer, and the ISA contribution is maxed out surely the pension contribution would be maxed first.

Maybe but we don't have enough information to determine that. An individual who is risk averse may look at cash isas as 'safer' and they can obviously be accessed at any times unlike a pension. £300k would put any individual in a very small cohort, which would surely mean huge excess income, and if subject to pension contribution restrictions, both annual and lifetime, might indicate that vct or eis investment would be tax efficient. 

csgohan4

NottinghamKnight said:

Cus said:

NottinghamKnight said:

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.

True, but I guessed as the husband is a top rate tax payer, and the ISA contribution is maxed out surely the pension contribution would be maxed first.

Maybe but we don't have enough information to determine that. An individual who is risk averse may look at cash isas as 'safer' and they can obviously be accessed at any times unlike a pension. £300k would put any individual in a very small cohort, which would surely mean huge excess income, and if subject to pension contribution restrictions, both annual and lifetime, might indicate that vct or eis investment would be tax efficient. 

EIT//VCT is risky and if you pick the wrong one, thats your money down the drain. But I guess they will be limited in what else they can do to minimize tax exposure. Although having this headache is better than not to be fair and one some people wouldn't mind being in