Stocks And Shares ISA Question

anbe69

I have some questions regarding Stocks And Shares ISA that I tired to find an answer to using Google search. And there's a lot of information available but none of it made it clear enough for me to apply to my case. So, if anyone could explain things to me, I would appreciate it.

My situation is as follows:

1. There is one month left in the current tax year and I would like to invest in an Stocks And Shares ISA for at least 10 years. I have £15,000 available for this purpose. I could see that when you open an Stocks And Shares ISA account you can start with a certain amount of money (in my case £15,000) and you can also choose to ad monthly contributions to that account for the duration of your investment (in my case £100). My first question is, will these monthly contributions affect the ISA allowance of the next tax year and other years to come?

2. Could I open another Stocks And Shares ISA account at the beginning of the next tax year with a starting amount of £20,000 and therefore have two accounts at the same time? And, again, with monthly contributions of £100? Or I wouldn't be able to add monthly contributions since I started with the amount of £20,000 and I would need to change the starting amount to £18,800 (since 100x12=1200; and 1200+18800=20000) in order to be able to add monthly contributions of £100 to it as well?

Thank you.

eskbanker

anbe69 said:

1. There is one month left in the current tax year and I would like to invest in an Stocks And Shares ISA for at least 10 years. I have £15,000 available for this purpose. I could see that when you open an Stocks And Shares ISA account you can start with a certain amount of money (in my case £15,000) and you can also choose to ad monthly contributions to that account for the duration of your investment (in my case £100). My first question is, will these monthly contributions affect the ISA allowance of the next tax year and other years to come?

Yes, the annual contribution allowance is £20K per tax year, so every time you contribute £100, your remaining allowance reduces by £100.  However, regardless of how much you pay in this month, you'll have a new allowance of £20K starting on 6 April.

anbe69 said:

2. Could I open another Stocks And Shares ISA account at the beginning of the next tax year with a starting amount of £20,000 and therefore have two accounts at the same time? And, again, with monthly contributions of £100? Or I wouldn't be able to add monthly contributions since I started with the amount of £20,000 and I would need to change the starting amount to £18,800 (since 100x12=1200; and 1200+18800=20000) in order to be able to add monthly contributions of £100 to it as well?

You could open another S&S ISA or you could continue to pay into the existing one, i.e. there's no need to open another, and bear in mind that you can only pay into one ISA of each type, so you couldn't be paying into two different S&S ISAs in the same tax year.  As above, once the new tax year starts, your contribution allowance is reset to £20K.

anbe69

Thank you very much for your reply. Let me just sum things up to see if I get it right:

If I open a Stocks And Shares ISA account this month, with a starting amount of £15.000 and monthly contributions of £100, then, basically, next month, when the new tax year starts, I could put another £18.800 into the same account (+£1200 in monthly contributions) and if I wanted I could do the same for the year 2022 and all the following years? But are these accounts flexible enough to allow you to add as much money into them as you want for as long as you don't add more than £20.000 per tax year. Because I thought once you open the account, you can't add any more money into it, apart the monthly contributions that were set when the account was opened. 

dave8204

You can add what you want,when you want as long as you don't go over the £20,000 limit per tax year. I do both,monthly contributions and lump sums. If a company is telling you that you can't make additional payments that's their policy,not the rules. I don't know of any that do ban that though,it would basically be turning money away that they make out of as well .
Personally with so much volatility I'd be paying the whole lot in equal instalments at the moment,not a big lump sum straight off but that's only my opinion. 
If you pay by monthly Direct Debit the company you invest through will usually just "roll over" into the next tax year's ISA without you needing to do anything. 

anbe69

Thank you very much dave8204!

Albermarle

Presume you are aware that once your money is in the ISA, you then have to decide where/how  to invest it, whether it is a lump sum or regular contributions ? In some simpler ISA's you can nominate which fund(s) before adding the cash and the money goes to that investment automatically . In others it will just sit as cash until you invest it .

jimjames

I'm not quite sure of the reasoning behind your original question. If you have £15k and £20k available now then wouldn't it make sense to put £20k in this tax year to make full use of the allowance? You can then use your £100 plus whatever lump sum in the next tax year but at least have filled the allowance.

anbe69

Hi, Albermarle. I haven't open an account yet, so, I am not sure how exactly things work. But considering I have no idea about what to invest in, I am expecting these things to be managed automatically. I could see some providers offer you options based on the risk level involved which is probably what I will go after.  Is there a provider you would suggest to someone who doesn't really know what to invest in? I am otherwise thinking of going with what my bank HSBC offers.

Hi, jimjames. The thing is that I have £15k in my current bank account and the £20k in a saving account which I can't access until May.

Nurse2047

https://www.vanguardinvestor.co.uk/investing-explained/what-are-lifestrategy-funds?intcmpgn=lifestrategyfunds_learnmore_link

Albermarle

anbe69 said:

Hi, Albermarle. I haven't open an account yet, so, I am not sure how exactly things work. But considering I have no idea about what to invest in, I am expecting these things to be managed automatically. I could see some providers offer you options based on the risk level involved which is probably what I will go after.  Is there a provider you would suggest to someone who doesn't really know what to invest in? I am otherwise thinking of going with what my bank HSBC offers.

Hi, jimjames. The thing is that I have £15k in my current bank account and the £20k in a saving account which I can't access until May.

Yes , some S&S ISA's are simpler than others . They offer just a handful of fund choices , linked to a risk level .
However you still have to choose which one , so the ISA is not managed for you .Although once you have picked the fund there is nothing else you need to do, so there is no ongoing management as such. 
HSBC ISA offers hundreds of funds but you can go for the easy option of their global strategy funds , of which there are only five. Again though you have to choose which one you think is suitable for you .

helpyhelper

If you contribute to a stocks and shares isa you decrease your allowance for that year, but doesn't affect next years allowance.
You can't hold two ISAs. But to be honest I don't know why you would need two.