Reinvesting dividends classed as paying into an ISA?

CreditCardChris

I'm pretty sure it's not but I just want to make sure. 

I have a vanguard ISA and a Trading212 ISA and my Vanguard pays me a dividend but it doesn't automatically reinvest that dividend for me. However if I manually use that dividend pay out each quarter to buy more shares of the same fund, is that classed as "paying into" an the ISA? Which means I couldn't then pay into my Trading212 ISA?

Thrugelmir

Leave the money inside the ISA. Find an accumulation fund then you won't have the issue. As the dividend will be automatically reinvested. 

AlanP_2

Reinvestment inside ISA not a problem. It is only new money going in to ISA that counts as a contribution. 

grumiofoundation

Dividends will be paid within the ISA can then be used to reinvest into the same (or different funds) without losing their 'ISA status. This won't count as 'contributing' to that ISA (contributions are based on new money being paid in).

Does the vanguard fund/ETF have a accumulation version? Then you won't have to do this yourself?

CreditCardChris

Thank you.

planteria

the above advice is correct - as long as you are not withdrawing funds from your ISA, or they're being paid out to an external account, they're not new contributions. as Thrugelmir says, Accumulation funds reinvest automatically. i've always used those.. or held individual shares, dividends are paid as cash within the ISA, and then i can use them to buy more shares/fund units.

CreditCardChris

planteria said:

the above advice is correct - as long as you are not withdrawing funds from your ISA, or they're being paid out to an external account, they're not new contributions. as Thrugelmir says, Accumulation funds reinvest automatically. i've always used those.. or held individual shares, dividends are paid as cash within the ISA, and then i can use them to buy more shares/fund units.

Quick follow up, so if the fund pays a dividend into your ISA and then you use that money to buy back into the fund, but you also have another S&S ISA on trading212, does that count as contributing to two ISAs in the same year? 

I'm guessing not but I just want to make sure. So a contributing is classified as transferring money INTO the ISA and that's it?

AlanP_2

CreditCardChris said:

planteria said:

the above advice is correct - as long as you are not withdrawing funds from your ISA, or they're being paid out to an external account, they're not new contributions. as Thrugelmir says, Accumulation funds reinvest automatically. i've always used those.. or held individual shares, dividends are paid as cash within the ISA, and then i can use them to buy more shares/fund units.

Quick follow up, so if the fund pays a dividend into your ISA and then you use that money to buy back into the fund, but you also have another S&S ISA on trading212, does that count as contributing to two ISAs in the same year? 

I'm guessing not but I just want to make sure. So a contributing is classified as transferring money INTO the ISA and that's it?

Q1 - NO

Q2 - YES

MaxiRobriguez

Q1 No, Q2 No.
It only counts if it is a *contribution*. Think of contribution as you adding money to the ISA, not receiving money from whatever is already inside it, like selling a fund or receiving a dividend.

You will only fall foul of contributing to two ISA's in the same tax year if you, from say a savings account you have, fund both the two different ISA's with your money. If you only fund one, you're fine, if you only use capital made from within side the wrapper, you're fine. 

eskbanker

MaxiRobriguez said:

Q1 No, Q2 No.
It only counts if it is a *contribution*. Think of contribution as you adding money to the ISA, not receiving money from whatever is already inside it, like selling a fund or receiving a dividend.

Which makes the answer to Q2 'yes', as per the previous post!

Eco_Miser

eskbanker said:

MaxiRobriguez said:

Q1 No, Q2 No.
It only counts if it is a *contribution*. Think of contribution as you adding money to the ISA, not receiving money from whatever is already inside it, like selling a fund or receiving a dividend.

Which makes the answer to Q2 'yes', as per the previous post!

Except that money can be transferred into an ISA without it being a contribution, if it comes from another ISA (of the same Individual).