Vanguard investment outside ISA

btcp

eskbanker said:

You might also wish to consider using a GIA temporarily and then shifting up to £20K worth of the investments into the ISA in ten months time, or, depending on your age and likely timescales for accessing the investments, using a SIPP as another tax wrapper?

I thought about using it temporarily and then move funds to ISA next tax year. As for SIPP, it would not make sense in terms of tax as I am planning to reach 40k allowance in workplace pension through salary sacrifice. I can probably put the money in SIPP but what is the benefit vs a regular investment account.

Albermarle

masonic said:

btcp said:

masonic said:

For funds like VLS it is very straightforward if you opt for Inc units as dunstonh suggests. Most platforms provide a consolidated tax statement after the end of each tax year showing all of your dividends/interest. Unless you plan to have a very large holding outside the ISA it is unlikely there will be any tax to pay, and unless you fill out a tax return or have some tax to pay you wouldn't need to declare anything to HMRC.

Maybe I’ll try with VLS then, if they give a tax statement it sounds straightforward. We are lacking about 20-30 k not a big amount. I do fill out tax return though, maybe I could just copy the figures from the statement Vanguard sends me. 

It's not really any harder than dealing with savings interest, it just means another couple of boxes in the return to fill in.

So if you do not normally fill out a tax return and instead work via the personal tax account online , then as long as the annual dividend amount is below £2000, you do not have to do anything with HMRC at all ?( I appreciate you still need to keep records in case they ask )

Billycock

Albermarle said:

masonic said:

btcp said:

masonic said:

For funds like VLS it is very straightforward if you opt for Inc units as dunstonh suggests. Most platforms provide a consolidated tax statement after the end of each tax year showing all of your dividends/interest. Unless you plan to have a very large holding outside the ISA it is unlikely there will be any tax to pay, and unless you fill out a tax return or have some tax to pay you wouldn't need to declare anything to HMRC.

Maybe I’ll try with VLS then, if they give a tax statement it sounds straightforward. We are lacking about 20-30 k not a big amount. I do fill out tax return though, maybe I could just copy the figures from the statement Vanguard sends me. 

It's not really any harder than dealing with savings interest, it just means another couple of boxes in the return to fill in.

So if you do not normally fill out a tax return and instead work via the personal tax account online , then as long as the annual dividend amount is below £2000, you do not have to do anything with HMRC at all ?( I appreciate you still need to keep records in case they ask )

Yes, correct.

Marcusian

eskbanker said:

You might also wish to consider using a GIA temporarily and then shifting up to £20K worth of the investments into the ISA in ten months time, or, depending on your age and likely timescales for accessing the investments, using a SIPP as another tax wrapper?

I am looking at doing something similar to OP, i am guessing this is 'bed and ISA' which as I understand it is the way to do this?
My ISA is maxed out at 20k, open GIA (with vanguard, but doesn't have to be), invest in that until April 22, then transfer it over via Bed and Isa? This means it won't be hit with any tax?

masonic

Marcusian said:

eskbanker said:

You might also wish to consider using a GIA temporarily and then shifting up to £20K worth of the investments into the ISA in ten months time, or, depending on your age and likely timescales for accessing the investments, using a SIPP as another tax wrapper?

I am looking at doing something similar to OP, i am guessing this is 'bed and ISA' which as I understand it is the way to do this?
My ISA is maxed out at 20k, open GIA (with vanguard, but doesn't have to be), invest in that until April 22, then transfer it over via Bed and Isa? This means it won't be hit with any tax?

If your provider has a Bed & ISA process, then it is worthwhile to use it as it should minimise time out of the market vs manually selling and moving the proceeds into the ISA before repurchasing the investments, and may save on trading fees if there are any.

Bed & ISA does not prevent you being 'hit with any tax' prior to moving into the ISA. If any income is paid while the investments are held outside the ISA, or the sale of the investments outside of the ISA generates a capital gain, these events will still be taxable. If you exceed either tax free allowance, then you would have to pay the relevant income tax/CGT.

btcp

Marcusian said:

I am looking at doing something similar to OP, i am guessing this is 'bed and ISA' which as I understand it is the way to do this?
My ISA is maxed out at 20k, open GIA (with vanguard, but doesn't have to be), invest in that until April 22, then transfer it over via Bed and Isa? This means it won't be hit with any tax?

I looked up Bed & ISA on Vanguard and the details are here.  From reading it, it sounds no different from if I sold investment elsewhere and moved money to ISA. You are not liable for future tax when the money is in the ISA , but you  may still be liable for tax at the point you sold your investment. I suppose if both of the accounts are within the same provider, it is just a convenience of having all under the same roof and login. I am not sure if that's going to be faster either, as I was switching my VLS 60 to VLS 100 and while the funds were sold, the new one are still not bought and it will probably take a standard couple of days.   Am I missing anything?