S&S ISA- Any Benefits/Negatives to Starting 2 Separate Ones?

lovelifer

Hello

Im looking to invest £10k and struggling to decide which provider suits me best. I wondered if splitting the money and starting 2 separate ones on different platforms was a good idea? Obviously one before and one after April. Im 55, self employed and dont earn enough to pay tax. I have no debts, own my home. Ive looked at SIPPs but would be penalised I think when I withdraw the money at a later date. I may have misunderstood this.
Any thoughts most welcome

AlanP_2

I would look again at SIPPs if I was you.

If you, as a non-taxpayer, invest £10k in a pension then HMRC add £2,500 to it in tax relief even though you haven't paid (or would pay) any tax.

You are limited to your earned income in the year (including the tax relief) so in this example that would be £12,500 so you may have to reduce down to your figures.

As you are over 55 you can access the pension at any time and 25% would be tax free and 75% would be taxable. If the 75% taxable + any other taxable income is less than your personal allowance then £0 tax would be paid.

NOTE - If you access any taxable money you will be limited to £4k a year contributions from that point on so thought needs to be given to when and how the pension money is withdrawn.


Whether it be an ISA or a SIPP you will need a provider. What is casuing the confusion there? 

lovelifer

Thanks for this. The confusion is I think due to the seemingly vast number of options. Im worried of taking the wrong one. 

So if I withdraw the remaining 75% it is treated as income for tax purposes...I hadnt grasped that before. 

eskbanker

lovelifer said:

So if I withdraw the remaining 75% it is treated as income for tax purposes...I hadnt grasped that before. 

Yes, but any such taxation on the way out is simply reversing the relief that you'd already acquired on the way in, so you're even on the 75% but ahead on the 25%, giving a net gain of 6.25%.

Eco_Miser

Splitting £10k over two ISAs is pretty pointless, doubles your administration, may increase your costs (depending on which provider you go with), and complicates adding more later, since you can only add to one S&S ISA in a financial year, leaving the two accounts unbalanced.

Have a read of https://monevator.com/compare-uk-cheapest-online-brokers/ to decide which provider, probably Vanguard would be best for you.

Have a read of the archives at that site for a wealth of information and opinion about investing.

Albermarle

Just to back to the original question . The provider of the S&S ISA , is less important than the investments you make within them.
For example if you pick the Provider A and invest in Fund X and then also pick provider B and also invest in Fund X , you haven't achieved anything by having two providers.
If you Pick provider A and invest in Fund X and Fund Y , then this is more logical because you have spread you r money over two investments.
It is a big simplification as some providers have different choices of funds to invest in , but hopefully you can see the point I am trying to make. 

lovelifer

Thanks for all the input. My thinking has been rather foggy, I feel a bit clearer now. The monevator site is useful, cheers Eco_Miser
I think Im ready to take a dip