How to hold £7,200 in a 'Cash ISA'

AlexGreen_2

CCat, thanks for the link, reading it (very quickly) the ETF looks like it will fail to qualify for Stocks & Shares ISAs due to point b)

where the scheme itself invests substantially in cash or near cash - such a scheme might be a money market scheme, or a scheme that invests in the same way as a money market scheme.

GTG

For anyone keen to take up the full allowance would the following fund with divi's re-invested not be a suitable place to park the S&S component temporarily until equities improve?

http://www.trustnet.com/ut/funds/?fund=421

Nice thinking BTW Alex.

AlexGreen_2

I think there might be more to this ETF re the yes/no in a Stocks & Shares ISA. Apparently if it's domiciled in Europe it WILL be allowed (it's going to be domiciled in Luxemburg) regardless of the 5% rule.

So until we get a NO from HMRC it's up in the air. Some board members obviously think no, I'm not disagreeing with them or their interpretation of the rules.

The ETF is supposed to be listed in early April so let's wait an see what the ISA brokers will allow because they are the ones that have to enforce the HMRC's rules, and if they don't then they can be fined.

GTG – Don’t know about that fund but again it’s up to the brokers to sanction what can and can’t be placed in a S&S ISA (according to the rules) so give one of them a call, I assume they have a ‘not allowed list’ of some sorts.

PS. Annual management charge is going to be 0.15%

GTG

AlexGreen wrote: »

I think there might be more to this ETF re the yes/no in a Stocks & Shares ISA. Apparently if it's domiciled in Europe it WILL be allowed (it's going to be domiciled in Luxemburg) regardless of the 5% rule.

So until we get a NO from HMRC it's up in the air. Some board members obviously think no, I'm not disagreeing with them or their interpretation of the rules.

The ETF is supposed to be listed in early April so let's wait an see what the ISA brokers will allow because they are the ones that have to enforce the HMRC's rules, and if they don't then they can be fined.

Will be keeping an eye on that one Alex, thanks.

GTG – Don’t know about that fund but again it’s up to the brokers to sanction what can and can’t be placed in a S&S ISA (according to the rules) so give one of them a call, I assume they have a ‘not allowed list’ of some sorts.

If you scroll down on the Trustnet page you will see under "Detailed Fund Information" it has an ISA wrapper. Furthermore I found a couple of guys on MF discussing how they had invested in this and a similar fund from Fidelity through a Barclays S&S ISA. I have a feeling this maybe the nearest you'll get to cash/fixed interest in an S&S ISA at this point in time.

cheerfulcat

GTG, I telephoned M&G this morning to ask whether the fund is eligible for a stocks and shares ISA and they said that it was - presumably because it holds corporate bonds.

This has been discussed in some depth on TMF ( can't remember whether a conclusion was reached though! ) . A good thread here.

GTG

cheerfulcat wrote: »

GTG, I telephoned M&G this morning to ask whether the fund is eligible for a stocks and shares ISA and they said that it was - presumably because it holds corporate bonds.

This has been discussed in some depth on TMF ( can't remember whether a conclusion was reached though! ) . A good thread here.

These are the threads I was referring to in my last post:

http://boards.fool.co.uk/Message.asp?mid=10580122&sort=whole

http://boards.fool.co.uk/Message.asp?mid=10392826&sort=whole#10534608

http://boards.fool.co.uk/Message.asp?mid=10535760&sort=whole

You will see conclusions, IIRC there are comments from an employee of Barclays Stockbrokers to confirm these.

I don't think it's been mentioned but it is possible to hold cash with your S&S ISA plan manager for an unspecified period of time pending an investment decision. The proviso is that you must intend to invest the cash in qualifying investments. AFAIK HMRC don't monitor the situation and plan managers are quite passive on this. Perhaps the best course of action would be to transfer S&S ISA monies to the plan manager that pays the highest interest rate on cash (despite the 20% deduction)?

Anyone know who that might be?

Paul_Herring

GTG wrote: »

Perhaps the best course of action would be to transfer S&S ISA monies to the plan manager that pays the highest interest rate on cash (despite the 20% deduction)?

Anyone know who that might be?

I'd be surprised if you'd find any of them offering anything much over 3% (if that.) The cash interest rate is purposely not meant to be a deciding factor when selecting an institution for your S&S ISA

jamesd

Hargreaves Lansdown will pay 3.8% after 20% tax deduction on amounts between 7k and 50k, 4.2% on the amount above that. If you're willing to take some risk mixing in some Blackrock Merrill Lynch UK Absolute Alpha may be interesting.

RayWolfe

All cash held in an ISA attracts 20% tax.

Paul_Herring

RayWolfe wrote: »

All cash held in an ISA attracts 20% tax.

Or 40%....

Edit: Apparently incorrect - see below.