Stocks & Shares ISA vs direct investment

BasilFawlty

If I have a capital gains allowance of £12,300 (subject to change of course), what's the point in paying a fee to tax wrap my investments within an ISA while I'm still at the stage where my capital gains on my shares would nowhere near exceed the tax free allowance?

Ayr_Rage

Don't forget dividend income outside an ISA is taxable !

BasilFawlty

Ayr_Rage said:

Don't forget dividend income outside an ISA is taxable !

I'm below the £1000 allowance.

wmb194

BasilFawlty said:

If I have a capital gains allowance of £12,300 (subject to change of course), what's the point in paying a fee to tax wrap my investments within an ISA while I'm still at the stage where my capital gains on my shares would nowhere near exceed the tax free allowance?

One of the unsung benefits of an Isa is that you can be extremely lax in your record keeping, in fact you actually don't need to keep track at all.  There are plenty of threads where people are struggling to calculate and report the tax liabilities of their GIAs after spending years and years neglecting their record keeping.

We already know the CGT allowance is to be reduced to £6k in the 23/24 tax year and to £3k in 24/25 and, presumably, in the years thereafter. It will become easier and easier to exceed it, particularly if you hope to see your pot grow over the years.

https://www.moneymarketing.co.uk/news/chancellor-halves-cgt-allowance-to-6000/

BasilFawlty

wmb194 said:

BasilFawlty said:

If I have a capital gains allowance of £12,300 (subject to change of course), what's the point in paying a fee to tax wrap my investments within an ISA while I'm still at the stage where my capital gains on my shares would nowhere near exceed the tax free allowance?

One of the unsung benefits of an Isa is that you can be extremely lax in your record keeping, in fact you actually don't need to keep track at all.  There are plenty of threads where people are struggling to calculate and report the tax liabilities of their GIAs after spending years and years neglecting their record keeping.

We already know the CGT allowance is to be reduced to £6k in the 23/24 tax year and to £3k in 24/25 and, presumably, in the years thereafter. It will become easier and easier to exceed it, particularly if you hope to see your pot grow over the years.

https://www.moneymarketing.co.uk/news/chancellor-halves-cgt-allowance-to-6000/

Thank you. So presumably in the short term sticking with my GIA is reasonable but long term there'll be a point where I need to consider selling up and setting up the S&S ISA?

Richard1212

BasilFawlty said:

If I have a capital gains allowance of £12,300 (subject to change of course), what's the point in paying a fee to tax wrap my investments within an ISA while I'm still at the stage where my capital gains on my shares would nowhere near exceed the tax free allowance?

No point, Basil. And it's much more fun and "personal" to deal direct. I highly recommend it. Any platform will do but I usually recommend Etoro for ease of use and a good platform for starting direct investment. Good luck and all the very best.

wmb194

BasilFawlty said:

wmb194 said:

BasilFawlty said:

If I have a capital gains allowance of £12,300 (subject to change of course), what's the point in paying a fee to tax wrap my investments within an ISA while I'm still at the stage where my capital gains on my shares would nowhere near exceed the tax free allowance?

One of the unsung benefits of an Isa is that you can be extremely lax in your record keeping, in fact you actually don't need to keep track at all.  There are plenty of threads where people are struggling to calculate and report the tax liabilities of their GIAs after spending years and years neglecting their record keeping.

We already know the CGT allowance is to be reduced to £6k in the 23/24 tax year and to £3k in 24/25 and, presumably, in the years thereafter. It will become easier and easier to exceed it, particularly if you hope to see your pot grow over the years.

https://www.moneymarketing.co.uk/news/chancellor-halves-cgt-allowance-to-6000/

Thank you. So presumably in the short term sticking with my GIA is reasonable but long term there'll be a point where I need to consider selling up and setting up the S&S ISA?

Yes, or you just pre-empt it all by using an Isa(s) now. It really depends on how you expect things to pan out. Obviously Isas have an annual contribution limit so you could end up like a lot of people where you have both Isas and GIAs plus things like Sipps.

The cost will depend on the broker and there are some cheap ones e.g., have you looked at Trading212? IIRC its Isa is fee-free but I don't think it offers OEICs, only ETFs and company shares. It also doesn't charge dealing commission. Another one is Freetrade which charges £3pm for its Isa.

Linton

Have you a better use for your ISA allowance? Putting the investments in an ISA does not cost anything extra . At least it will save you keeping records of all your transactions.

LHW99

Since you can always remove money from an ISA to put into a GIA (if you so want / need) and you have a use it or lose it yearly llimit for ISA's, it seems worth filling an ISA first, particularly as the limit may well wither over the years, even if it is not actually lowered.and so become relatively less useful if you wait.

MX5huggy

CGT allowance is halving next year and halving aging the year after. Bit of good fortune and you could easily hit them then. 

Who’s charging extra for an ISA?

InvesterJones

BasilFawlty said:

If I have a capital gains allowance of £12,300 (subject to change of course), what's the point in paying a fee to tax wrap my investments within an ISA while I'm still at the stage where my capital gains on my shares would nowhere near exceed the tax free allowance?

Generally platforms don't charge extra for wrapping investments in an ISA - if you're comparing platforms then of course some are cheaper than others, but be wary of seemingly fee-free platforms - they're still making their money from you or they wouldn't be doing it. But you can get fee-free ISAs just like GIAs.

The nice thing about ISAs is you never pay the tax - so while you might be below the threshold for a >0% rate now, in 20 years that same investment might not be. Yes, you could wait until it hits a level to then transfer it into a wrapper, but who's to say you won't have some other investments you want to put in an ISA the year that that occurs? You can't carry over ISA allowance, so it's good to 'bank' it if you have a choice