How to split funds between ISA/SIPP/GIA for max efficiency

fizio

Just finalised my choice of where to invest (within the vanguard platform) and settled on 4 funds
global equity tracker, developed world, global bonds and uk all share - split 40/40/10/10 but my money is spread across isa/sipp/gia and I am wondering if it matters which fund is invested in which vehicle? given they all have different tax status - eg GIA will be capital gains/dividends so should I not have bonds in it? 
I know some of the feedback will be all about why I picked these funds but I am more interested in the link between fund and investment vehicle from a tax/withdrawel perspective. 
Appreciate any insight or maybe it makes zero difference...

csgohan4

why not max out the SIPP/ISA before going onto GIA? it would be more tax efficient that way
If applicable LISA would be reasonable

talexuser

Agreed, no point in having GIA with space in ISA/SIPP. I put my lowest dividend players in GIA to minimise income tax, and sell the CTG limit every year to keep the gains reasonable. Either just rebalance the GIA or if it is necessary use some of the money to max out ISA/SIPP.

ColdIron

It depends on your circumstances, other taxable stuff and plans for the money. For instance you can earn up to £18,570 interest without paying tax but for most people in employment this is really your £1,000 Personal Saving Allowance or even just £500 if you pay higher rate tax. How much headroom do you have after your savings have been accounted for?

You can earn £2,000 in dividends before paying tax, do you receive any other dividends? If you do have to pay tax then 7.5% is not too onerous

Capital Gains are generally easy to deal with, especially if you Bed & ISA each year. You would be doing well to exceed the £12,300 Annual Exempt Amount on a £20,000 sale over a short timescale

So it really depends on your circumstances, the amounts involved and your future plans. There is no one size fits all. But as a general rule pensions are generally the most tax efficient vehicles, especially if you pay the higher rate so (bearing in mind your personal circumstances which you haven't told us anything about) I would aim to use my full allowance first in any event

For me (and my circumstances which are almost certainly different to yours) I tuck away the interest bearing stuff first because I have no allowance left and the rate is 20%. Then the higher dividend stuff as I have no allowance there either but 7.5% wouldn't be the end of the world and in reality whatever is left in the GIA will probably pay some level of dividend. I leave my growth stuff in the GIA but I will have tucked it away in my ISA in 5 years and don't anticipate exceeding my allowance in that time and if I did it could be managed

If I was much younger than I am I wouldn't have much use for bonds or higher dividends so they wouldn't be a big concern. I might have a large amount in a 100% equities GIA so I would look to shelter the high growth stuff first as after 10 years or more there is much more scope to exceed the AEA

Horses for courses

Linton

There is no simple answer to the question of which investments to put in which accounts, rather some factors you should take into consideration.  Any allocation you make will be a somewhat unsatisfactory compromise.
1) If you rebalance you are liable to end up with bits of everything everywhere since transfers between different accounts is a hassle and in some cases impossible.  For this reason trying to keep things tidy by holding related investments in the same account could be a waste of time.  Easier I find to manage individual portfolios across platforms/accounts.  
2) Tax with GIAs can be a hassle and requires good records to be kept of all transactions even if you aren't liable to any tax so best to avoid them if at all possible.  Better to max out your and spouse's (if any) S&S ISAs every year.
3) Paying out regular dividends/interest from a SIPP is difficult since all drawdowns need to be specified before hand with the cash in place perhaps 2 weeks before what is likely to be a single monthly platform payout date.  Variable drawdowns require the platform to be informed each time which may incur charges.  WIth ISAs and GIAs, perhaps depending on the platform, you can get all diviends/interest paid directly, immediately  and automatically into your current account.
4) If you are saving for your beneficiaries a SIPP could be best as it avoids IHT.
5) If you arent saving for your beneficiaries it could be sensible to max out your current tax band with SIPP drawdowns to simplify things in the future and possibly reduce costs.
6) If you have investments you are likely to need to sell in an emergency dont put them in SIPPs since, as said previously, there is probably only one payout day each month.

Thrugelmir

fizio said:

Just finalised my choice of where to invest (within the vanguard platform) and settled on 4 funds
global equity tracker, developed world, global bonds and uk all share - split 40/40/10/10 but my money is spread across isa/sipp/gia and I am wondering if it matters which fund is invested in which vehicle?

One aspect is how you intend maintaining the portfolio balance/allocation. If the different vehicles hold different funds. Also how you will drawdown the funds once in retirement as presumably this is your objective. 

fizio

csgohan4 said:

why not max out the SIPP/ISA before going onto GIA? it would be more tax efficient that way
If applicable LISA would be reasonable

Yes I have maxed ISA and SIPP with GIA being last resort

kuratowski

I believe there are further resorts waiting ready if you need them

fizio

ColdIron said:

For me (and my circumstances which are almost certainly different to yours) I tuck away the interest bearing stuff first because I have no allowance left and the rate is 20%. Then the higher dividend stuff as I have no allowance there either but 7.5% wouldn't be the end of the world and in reality whatever is left in the GIA will probably pay some level of dividend. I leave my growth stuff in the GIA but I will have tucked it away in my ISA in 5 years and don't anticipate exceeding my allowance in that time and if I did it could be managed

If I was much younger than I am I wouldn't have much use for bonds or higher dividends so they wouldn't be a big concern. I might have a large amount in a 100% equities GIA so I would look to shelter the high growth stuff first as after 10 years or more there is much more scope to exceed the AEA

Horses for courses

Thanks for sharing and I have already maxed out all tax-saving methods inc dividend allowance etc and have circa 200k for GIA - I do intend to migrate GIA into ISA's over time but will take a while.
I am near retirement and have factored in using the spouse to maximise savings and investments as well. 
I am not overly concerned about assets allocation always being adjusted to match where I started as long as its roughly in the right area. For simplicity I would like to minimise having the same fund in different account types so something like ISA=world tracker, SIPP=bonds and GIA=Dev World Tracker plus UK tracker - is not far off given the sizes of the pots. 
I agree there isn't really a right answer but its something that occurred to me once I had made the fund decision and I always find this forum as a good place to get opinions. 
I totally get that there will be an additional complexity at drawdown time etc and its very likely my allocations will get tweaked as money moves around - so this more of a starting point that may be good for next few years
Thanks 

Old_Lifer

Anyone who has been investing for decades  (before PEPs and ISAs) may well have bullt-up a sizeable investment portfolio and  even doing an annual Bed & ISA may be little more than tinkering at the edges,  so for some a GIA may not be a choice of last resort.