Getting into the market

Kaizen917

If you plan to stay invested in this for the longer term (say 10+ years), it becomes quite irrelevant how you feed in the allowance. After all, even if you do the whole 20k at once, you are still cost averaging on year-by-year basis (instead of monthly).

But I get it since I had similar issue when I first started and it made me feel more at ease drip feeding smaller amounts. In hindsight, it lost me on some gains but markets could have gone either way...what mattered is that it felt like my kind of approach.If that sounds like you too, then go for drip feed now and re-evaluate your approach when the following FY comes up.

dingling68

valuepack said:

Thanks again everyone for your comments.

I recently read How to own the World by Andrew Craig. Then I read the Gone fishin' Portfolio by Alexander Green. Then I went back and read How to own the World again to get a better understanding of the bits I struggled to follow

My workplace pension contributes a generous 15% and I contribute 5.5% at the moment.

I've moved it from the default fund to 100% equities. They didn't offer an all world fund, so I selected two funds: 95% BlackRock World index fund excluding UK and 5% BlackRock UK index fund.

I had a play with seeing how far I can increase my own contributions, and it maxes out at 15% and 30% total. It does offer an option to make a payment, but I need to check if that has to be within the 30%.

As a back up I've opened a SIPP with Invest engine, just in case I cannot pay 100% of my earnings per year into my workplace pension.

The reason I was planning to get my inheritance invested in both my pension and stocks and shares ISAs was because I thought this was the quickest way to get the money invested in a tax efficient way.

Is it not?

Just to mention that you would need to factor in the tax relief on your contributuon as part of the calculation of how much of your salary you can pay in to your pension

valuepack

jimjames said:

If you've not used your 2024-25 allowance then it's worth trying to use that as well if you can depending on the amount of the inheritance. With a flexible ISA even if you can put the money in just before 5th April and remove it just after you'll have secured that allowance.

I have 3k saved for holidays this year and it's sat in my high street bank savings account earning a measley 1.36%.

If I transfer it into my ISA and leave it in there as cash, does this mean that it counts as part of my 2024 to 2025 allowance, so when I need the money I can withdraw it but then put it back in 2025 to 2026 and it would count for the previous year?

Sorry if I didn't explain that question very well, I was planning to not remove anything from the ISA until retirement, but if I can do this to open up more savings for this year's allowance I'll do it.

Catplan

valuepack said:

jimjames said:

If you've not used your 2024-25 allowance then it's worth trying to use that as well if you can depending on the amount of the inheritance. With a flexible ISA even if you can put the money in just before 5th April and remove it just after you'll have secured that allowance.

I have 3k saved for holidays this year and it's sat in my high street bank savings account earning a measley 1.36%.

If I transfer it into my ISA and leave it in there as cash, does this mean that it counts as part of my 2024 to 2025 allowance, so when I need the money I can withdraw it but then put it back in 2025 to 2026 and it would count for the previous year?

Sorry if I didn't explain that question very well, I was planning to not remove anything from the ISA until retirement, but if I can do this to open up more savings for this year's allowance I'll do it.

It would need to be a flexible cash ISA to do that, if so all good, you can pay in this year, withdraw next year and replace in the same financial year. Only if it’s a flexible cash ISA.

Eco_Miser

valuepack said:

jimjames said:

If you've not used your 2024-25 allowance then it's worth trying to use that as well if you can depending on the amount of the inheritance. With a flexible ISA even if you can put the money in just before 5th April and remove it just after you'll have secured that allowance.

I have 3k saved for holidays this year and it's sat in my high street bank savings account earning a measley 1.36%.

If I transfer it into my ISA and leave it in there as cash, does this mean that it counts as part of my 2024 to 2025 allowance, so when I need the money I can withdraw it but then put it back in 2025 to 2026 and it would count for the previous year?

Sorry if I didn't explain that question very well, I was planning to not remove anything from the ISA until retirement, but if I can do this to open up more savings for this year's allowance I'll do it.

You can open a flexible cash ISA and pay in that 3k (and any other money you happen to have spare on the 4th April 2025) as part of your 20k ISA allowance for 2024-25 tax year. Then on or after 7th  April you can withdraw it as needed, and you have up to 5th April 2026 to replace that money (from your inheritance) into the same cash ISA without it counting against your 2025-26 ISA allowance.

You can then ISA transfer it to your S&S ISA if you wish. You could put the new 20k ISA subscription in either account.

I suggest using a cash ISA for this rather than using your S&S ISA for clarity (not having money going in then out quickly), so you still don't withdraw anything from your S&S ISA, and because many S&S ISAs are not flexible.

I mentioned 4th and 7th April rather than 5th and 6th to be certain that they are in the correct tax year and don't get caught in any IT or AML mess-ups.

You might decide to keep the 3k in the flexible cash ISA until you need to spend it, as it will likely be earning more than 1.36% and won't be taxable.

valuepack

Eco_Miser said:

valuepack said:

jimjames said:

If you've not used your 2024-25 allowance then it's worth trying to use that as well if you can depending on the amount of the inheritance. With a flexible ISA even if you can put the money in just before 5th April and remove it just after you'll have secured that allowance.

I have 3k saved for holidays this year and it's sat in my high street bank savings account earning a measley 1.36%.

If I transfer it into my ISA and leave it in there as cash, does this mean that it counts as part of my 2024 to 2025 allowance, so when I need the money I can withdraw it but then put it back in 2025 to 2026 and it would count for the previous year?

Sorry if I didn't explain that question very well, I was planning to not remove anything from the ISA until retirement, but if I can do this to open up more savings for this year's allowance I'll do it.

You can open a flexible cash ISA and pay in that 3k (and any other money you happen to have spare on the 4th April 2025) as part of your 20k ISA allowance for 2024-25 tax year. Then on or after 7th  April you can withdraw it as needed, and you have up to 5th April 2026 to replace that money (from your inheritance) into the same cash ISA without it counting against your 2025-26 ISA allowance.

You can then ISA transfer it to your S&S ISA if you wish. You could put the new 20k ISA subscription in either account.

I suggest using a cash ISA for this rather than using your S&S ISA for clarity (not having money going in then out quickly), so you still don't withdraw anything from your S&S ISA, and because many S&S ISAs are not flexible.

I mentioned 4th and 7th April rather than 5th and 6th to be certain that they are in the correct tax year and don't get caught in any IT or AML mess-ups.

You might decide to keep the 3k in the flexible cash ISA until you need to spend it, as it will likely be earning more than 1.36% and won't be taxable.

Thanks for this reply. 

My S&S ISA is a flexible ISA, and if I deposit cash but don't invest it I can earn interest.

Does the 3k have to be in the ISA as this tax year ends and the new one begins?

I'll be away from the beginning of April and will need some of the money.

Also, I don't want to get into the habit of withdrawing from an ISA.

Section62

valuepack said:

Does the 3k have to be in the ISA as this tax year ends and the new one begins?

Yes, if you make use of the flexible ISA rules then you have to put the money back into the account before the end of the tax year to be able to have it in your ISA in the next tax year.  If you wait until the new tax year to add it back in then it becomes part of the new year's contributions instead.

Eco_Miser

valuepack said:

Eco_Miser said:

valuepack said:

jimjames said:

If you've not used your 2024-25 allowance then it's worth trying to use that as well if you can depending on the amount of the inheritance. With a flexible ISA even if you can put the money in just before 5th April and remove it just after you'll have secured that allowance.

I have 3k saved for holidays this year and it's sat in my high street bank savings account earning a measley 1.36%.

If I transfer it into my ISA and leave it in there as cash, does this mean that it counts as part of my 2024 to 2025 allowance, so when I need the money I can withdraw it but then put it back in 2025 to 2026 and it would count for the previous year?

Sorry if I didn't explain that question very well, I was planning to not remove anything from the ISA until retirement, but if I can do this to open up more savings for this year's allowance I'll do it.

You can open a flexible cash ISA and pay in that 3k (and any other money you happen to have spare on the 4th April 2025) as part of your 20k ISA allowance for 2024-25 tax year. Then on or after 7th  April you can withdraw it as needed, and you have up to 5th April 2026 to replace that money (from your inheritance) into the same cash ISA without it counting against your 2025-26 ISA allowance.

You can then ISA transfer it to your S&S ISA if you wish. You could put the new 20k ISA subscription in either account.

I suggest using a cash ISA for this rather than using your S&S ISA for clarity (not having money going in then out quickly), so you still don't withdraw anything from your S&S ISA, and because many S&S ISAs are not flexible.

I mentioned 4th and 7th April rather than 5th and 6th to be certain that they are in the correct tax year and don't get caught in any IT or AML mess-ups.

You might decide to keep the 3k in the flexible cash ISA until you need to spend it, as it will likely be earning more than 1.36% and won't be taxable.

Thanks for this reply. 

My S&S ISA is a flexible ISA, and if I deposit cash but don't invest it I can earn interest.

Does the 3k have to be in the ISA as this tax year ends and the new one begins?

I'll be away from the beginning of April and will need some of the money.

Also, I don't want to get into the habit of withdrawing from an ISA.

To make use of the 2024-25 ISA allowance the money must be actually in the ISA as the financial year rolls over at midnight on 5th/6th April. 

I have an S&S ISA which I've never withdrawn capital from in 25 years (I do take the dividends as they arise as part of my retirement income).
I also have a flexible cash ISA which I treat as an easy access savings account on which no tax is paid (which is what it is) which I use to balance out the irregular cash-flows (28 day, calendar month, quarterly, annual).
Totally different in form and purpose but happen to share part of their name and the 20k allowance.  This is why I suggested you open a cash ISA, so you don't withdraw from your S&S ISA.

valuepack

Since starting this thread it turns out that when funds are distributed it's going to be more than I thought, nearly 200k.

As a basic rate tax payer earning 37k, I'm looking at a few years worth of investing to get this into my workplace pension and stocks and shares ISA.

At maximum pension and isa contributions for a financial year, I'll have a stack of money waiting for the next couple of years.

Just wondering about a reasonably profitable and safe strategy.

If I invest in equities in a GIA I'll have to sell up at end of year to move the money across. I'll be at the mercy of whatever the sale value is at that time, plus fees and cgt.

If I put it in the bank I'll be liable for cgt.

Gilts with low coupon earnings but half decent end of term yield?

I'm still a newbie so looking at all options.

ColdIron

valuepack said:

If I put it in the bank I'll be liable for cgt.

Bank accounts are typically savings accounts. These pay interest which is liable to income tax and not capital gains tax