Confusion with having two S&S ISAs

Lee_N

I've read multiple threads, searched HMRC, Internet etc., I'm struggling to get clarification.
I'm new to investing. Since May this year I have opened..

Natwest invest: S&S ISA
HL: SIPP
Freetrade: General investment account (just for fun)

None of these will hold large amounts of money, probably less than 10k per year between them. Currently only £650 in Natwest and roughly 2k in the SIPP.
I've decided I now want to open another S&S ISA with IWeb. No problem, I understand that I cannot do that until the start of next tax year and I can only pay into one of them each tax year. What I can't get my head around is the lack of clarification on having two ISAs of the same kind. What is a closed ISA? Is this the account completely shut down or is it just the tax wrapper?

For example, let's say I carry on with the Natwest one for the rest of this year, and then next tax year open a new one with IWeb or some other platform and start using that instead. After that I'd just leave the Natwest one alone for a few years building interest (hopefully) but pretty much forget about it for now. If I did that, would the Natwest ISA lose its tax benefits, would I need to now include it in my self assessment as money earned? 

I'm guessing the SIPP and the GIA will have no effect on the above?

I'm 56 years old so I'm pretty much throwing everything I've got into the SIPP but I want to continue with the S&S alongside it - if nothing else just for the learning experience and access to some cash should I need it.

I'm not looking for advice as such, just an understanding. 

Thanks in advance.

Alexland

Yes for this ISA rules discussion you can ignore the SIPP and GIA as these have their own considerations.

You are fine to open/hold multiple S&S ISAs but you can only contribute new money into one S&S ISA per tax year. You are also fine to contribute into your current tax year S&S ISA then follow the transfer process to a new account with another provider (even an existing S&S ISA from a previous tax year) and then continue to contribute using up your remaining ISA allowance. Or just open a new S&S ISA for next tax year's contributions stopping any contributions into the existing S&S ISA and leaving it to grow.

If you want to open an account with iWeb then be quick as the new customer charge is about to increase from £25 to £100 so if you are not going to transfer your Natwest ISA into iWeb (maybe you are locked in under a cashback deal) then open a general account with £1 as then you will be a customer and there will be no additional charge to open the S&S ISA next tax year. iWeb's fixed charges are better suited to larger account valuations circa £25k+ and for smaller accounts percentage based charges investing in funds is usually better.

Also S&S ISAs are medium to long term investments for at least 5 years (preferably much longer) to avoid needing to withdraw when markets are low so not suitable for "access to some cash should I need it" - that's what cash savings are for.

Lee_N

Alexland, thanks very much for the reply.

So just to be clear, I don't have to do anything to the previous year's ISA, simply stop paying into it is enough and the new one will take over once opened?

I did see that about the iWeb charge so will probably do that anyway. I might even  just transfer Natwest to iWeb, I don't think I'm tied in. I just like to understand things. After lots of reading over the past few months I was firmly under the impression that I could have as many ISAs as I want as long as I don't go over 20k a year - clearly I got that wrong. It was only through opening the Freetrade account that I had to tick a box saying that I don't have any other ISAs which made me look further.

I understand the need to invest long term, like I say it's still a learning experience for me which is why I'm not putting too much money into it at the moment except for the SIPP, which I'm being more careful about. I learn far quicker by just getting on and doing, if I lose a few hundred quid in the process I'm not bothered - I just see it as the cost of learning. I could just as easily throw more money at a course and probably not learn as much as having real world experience which always throws up more questions.

Thanks again.

Alexland

So just to be clear, I don't have to do anything to the previous year's ISA, simply stop paying into it is enough and the new one will take over once opened?

Well yes the new one would be your S&S ISA for the new tax year. Just make sure you stop any regular scheduled contributions into the old one in plenty of time before the end of the tax year.

I might even  just transfer Natwest to iWeb, I don't think I'm tied in.

If you received an incentive then their offer terms may have have required a certain minimum contribution pattern or period of investment.
I am curious why you want to move to iWeb given their fixed charges are better suited to much larger accounts?

It was only through opening the Freetrade account that I had to tick a box saying that I don't have any other ISAs which made me look further.

So did you also open an ISA with Freetrade and if so have you added money onto it this tax year? That would be a problem if you have also added money into the Natwest S&S ISA.

I'm not putting too much money into it at the moment except for the SIPP

It may be more efficient to add money into a workplace pension if you have access to one.

Lee_N

If you received an incentive then their offer terms may have have required a certain minimum contribution pattern or period of investment.

No, I just created the account out of curiosity, no special deals, although I will double check that.

I am curious why you want to move to iWeb given their fixed charges are better suited to much larger accounts?

Just for more choice, the Natwest invest account only gives you 5x portfolio options with different risk levels. I could just stick with HL for everything but was really just looking at the charges for non-fund trades £11.95 vs £5 iWeb. I intend to add a lot more money over the next few years but admittedly I haven't yet added up the full costs over a few years.

So did you also open an ISA with Freetrade and if so have you added money onto it this tax year? That would be a problem if you have also added money into the Natwest S&S ISA.

No. I was about to but then I see the warning (thankfully) which made me look further. I just opened the GIA with £200, really just to have a play around, tempted by the free trading. It's "app" only and I'm not an app person, I'm also not fully confident about their business model so I'll probably tread very carefully with it and just use it as an educational tool for now.

It may be more efficient to add money into a workplace pension if you have access to one

I'm self employed / sole trader, not Ltd. I thought that was my only option?

Many thanks again.

Alexland

Lee_N said:

No, I just created the account out of curiosity, no special deals, although I will double check that.

I didn't realise anyone would open a Natwest S&S ISA without an incentive. As you say the choice is limited and it isn't best value. Not really a product worth keeping.

I could just stick with HL for everything but was really just looking at the charges for non-fund trades £11.95 vs £5 iWeb.

Yeah HL are also not cheap either but yes while share dealing might be cheaper with iWeb it's still £5 which can be a high proportion on a small account.

I intend to add a lot more money over the next few years but admittedly I haven't yet added up the full costs over a few years.

Suggest you do some spreadsheets. It usually works best to invest in funds on low percentage charges for the first few years until an account gets big enough.

I'm self employed / sole trader, not Ltd. I thought that was my only option?

Aah yes probably is then.

Lee_N

Alexland said:

I didn't realise anyone would open a Natwest S&S ISA without an incentive. As you say the choice is limited and it isn't best value. Not really a product worth keeping.

Honestly, at the time I didn't even know what a fund was! I've always avoided anything to do with shares and investments, my brain is full of enough complication with being self employed, I've only just got past the headache of GDPR. It's only when Natwest kept dropping the interest on the savings account to almost zero, and time on my hands with the lockdown, that made me look into it. Now I'm like a kid with a new toy, just not quite as reckless, well maybe just slightly

Albermarle

To be clear , you can open more than one ISA a year as long as they different types eg S&S ISA ; cash ISA ; IFISA etc 
So for example you could open a new S&S ISA with say £6K and then a cash ISA and the max you could add would be £14K