Stocks & Shares ISA vs direct investment

dunstonh

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?

Most platforms/providers do not charge for the ISA wrapper.

It is £12,300 until April, then £6,000 and then £3,000.   And there is a review into unearned income etc and that may result in us following the Australian model of taxing gains as income with no CGT allowance.

I'm below the £1000 allowance.

Its £2,000 and going to £1,000 next tax year and £500 the year after and also part of that review.

eskbanker

Richard1212 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?

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.

In what way is investing via a GIA much more fun and "personal" than doing so via an ISA?

grumiofoundation

eskbanker said:

Richard1212 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?

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.

In what way is investing via a GIA much more fun and "personal" than doing so via an ISA?

When you have a wealth manager doing it for you...?

BasilFawlty

I'm interested in what platforms don't have fees for the S&S ISA option? I have a free cash ISA with my bank but use a variety of platforms for investing and those that offer the S&S ISA option charge some form of fees, whether that's annual percentage based or monthly and then there's those that just charge individual share dealing fees.

II charge £10pm, FT charge £5pm, HG is 0.45%, Vanguard too complicated to decipher. Essentially, I can't find a single platform where trading in stocks and shares within an ISA tax wrap is actually free or at least spread based?

My point, why pay between £50 to £120 per year to tax wrap my investments when at this stage, they're tax free anyway? Surely it only makes sense to spend the money on tax wrapping when capital gains tax looms on the horizon?

eskbanker

BasilFawlty said:

I'm interested in what platforms don't have fees for the S&S ISA option? I have a free cash ISA with my bank but use a variety of platforms for investing and those that offer the S&S ISA option charge some form of fees, whether that's annual percentage based or monthly and then there's those that just charge individual share dealing fees.

II charge £10pm, FT charge £5pm, HG is 0.45%, Vanguard too complicated to decipher. Essentially, I can't find a single platform where trading in stocks and shares within an ISA tax wrap is actually free or at least spread based?

My point, why pay between £50 to £120 per year to tax wrap my investments when at this stage, they're tax free anyway? Surely it only makes sense to spend the money on tax wrapping when capital gains tax looms on the horizon?

https://monevator.com/compare-uk-cheapest-online-brokers/ compares the costs of the main players, in which you'll see that in most cases the cost for investing in a S&S ISA is exactly the same as doing so in a GIA, both for custody charges and transaction costs, so, for example, II's charge of £10pm covers both the GIA and the ISA.

There are exceptions like Freetrade though, who'll charge extra for ISAs, but if you're looking for platforms that don't use differential pricing between GIA and ISA then the vast majority (of those listed by Monevator) quote equal tariffs.

jimjames

Richard1212 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?

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.

You seem to have missed the point that you can buy shares directly inside an ISA or outside. Most platforms, if not all, will offer both ISA and non ISA versions of their investment accounts so if there is no cost why wouldn't you use the ISA?

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?

What happens when your investments do reach the level of the allowances? Or the allowances are cut? You've then got to sell everything (triggering CGT) and then rebuy inside an ISA. So much easier to buy inside to start with.

Eco_Miser

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 at all, which is why I use a platform (Iweb) that has the same fees for ISA and GIA (basically nothing a year, and £5 a transaction) and only use the ISA.

Remember you can only put £20k a year into an ISA, so by the time your capital gains would exceed the tax free allowance it's too late to avoid them, especially as the allowance is reducing in April.