Pay less tax when withdrawing money from stock platforms?

LouP25 · 15 January at 4:43PM

Hello, I have my Freetrade and LightYear free trading platforms set up. Also have Aegon account and planning to open Vanguard LS. I expect to retire in around 35 years. I suppose I will want to withdraw a lump sum of money from each of the platforms, and will have to pay tax, which is annoying but fair enough. Is there anything I can do now to decrease that tax a bit? The main thing I want to cut down any regrets later on, for not doing/knowing something simple that can cost me thousands of pounds. (I am not interested in daily buys/sells/monitoring of my shares). Thank you in advance.

csgohan4 · 15 January at 4:48PM

as long as they are in tax wrappers, i.e ISA/LISA then no tax. GIA will have tax

LouP25 · 15 January at 5:00PM

csgohan4 said:

as long as they are in tax wrappers, i.e ISA/LISA then no tax. GIA will have tax

oh, really? thank you for this. In this case, should I move my Aegon £3000 from Risk 5 (out of 5) to Aegon ISA? Does ISA even grow? Oh, there is SO much to learn.

Voyager2002 · 15 January at 5:06PM

LouP25 said:

csgohan4 said:

as long as they are in tax wrappers, i.e ISA/LISA then no tax. GIA will have tax

oh, really? thank you for this. In this case, should I move my Aegon £3000 from Risk 5 (out of 5) to Aegon ISA? Does ISA even grow? Oh, there is SO much to learn.

You can have virtually any investment within an ISA or SIPP, ranging from high risk to low risk.

Any money you put into a SIPP is locked away until you are 55, but at the same time you put it in the government adds a percentage of what you put in, which is a great start if you want it to grow for the long term. You don't get this 'bonus' with an ISA, but you can take money out at any time, completely free of tax.

So yes, there is a fair amount to learn and it could save you an awful lot of money.

eskbanker · 15 January at 5:07PM

LouP25 said:

csgohan4 said:

as long as they are in tax wrappers, i.e ISA/LISA then no tax. GIA will have tax

oh, really? thank you for this. In this case, should I move my Aegon £3000 from Risk 5 (out of 5) to Aegon ISA? Does ISA even grow? Oh, there is SO much to learn.

So it would seem - ISA is just a wrapper and doesn't grow as such, any growth comes from the investments you buy within it....

LouP25 · 15 January at 5:41PM

Voyager2002 said:

You can have virtually any investment within an ISA or SIPP, ranging from high risk to low risk.

Any money you put into a SIPP is locked away until you are 55, but at the same time you put it in the government adds a percentage of what you put in, which is a great start if you want it to grow for the long term. You don't get this 'bonus' with an ISA, but you can take money out at any time, completely free of tax.

So yes, there is a fair amount to learn and it could save you an awful lot of money.

Does it grow same in SIPP then GIA? Aegon Risk 5/5 grows ok. I am thinking to split £3000 in half, and put one half into SIPP and another keep in GIA. Is this a wise decision?

EthicsGradient · 15 January at 6:04PM

LouP25 said:

Voyager2002 said:

You can have virtually any investment within an ISA or SIPP, ranging from high risk to low risk.

Any money you put into a SIPP is locked away until you are 55, but at the same time you put it in the government adds a percentage of what you put in, which is a great start if you want it to grow for the long term. You don't get this 'bonus' with an ISA, but you can take money out at any time, completely free of tax.

So yes, there is a fair amount to learn and it could save you an awful lot of money.

Does it grow same in SIPP then GIA? Aegon Risk 5/5 grows ok. I am thinking to split £3000 in half, and put one half into SIPP and another keep in GIA. Is this a wise decision?

You can add up to £20,000 each year to an ISA. Unless you want to invest more new money than this per year (or want to keep your investments denominated in foreign currency), there's not much reason to use a general investment account before an ISA. If you're investing thousands each year for several years, using an ISA will probably save you a significant amount of tax compared with a GIA.

DiamondLil · 15 January at 6:04PM

Money you pay into a SIPP or other type of pension is untaxed going in, i.e. pension contributions are deducted from your gross income before income tax is calculated, and taxed when drawing it out. Money you pay into an ISA is from taxed income, i.e. tax has been paid on the money when you were paid it, and the money is not subject to tax when drawing it out of the ISA. Only use a GIA when you've fully utilised the pension and ISA allowances.

Albermarle · 15 January at 7:27PM

You could also look at a Lifetime ISA.

Probably best to step back from doing anything until you have a better understanding of how pensions & ISA's work .

Pensions & Investing - MoneySavingExpert
Lifetime ISA (LISA): how they work & best buys - Money Saving Expert
Pensions and retirement | Help with pensions and retirement | MoneyHelper
Investing | Help with investments | MoneyHelper

LouP25 · 15 January at 9:48PM

DiamondLil said:

Money you pay into a SIPP or other type of pension is untaxed going in, i.e. pension contributions are deducted from your gross income before income tax is calculated, and taxed when drawing it out. Money you pay into an ISA is from taxed income, i.e. tax has been paid on the money when you were paid it, and the money is not subject to tax when drawing it out of the ISA.

Will it be legal to move my small pension pot to ISA, after I invested it for 2+ years, so it increases a bit? It wasn't taxed coming in, and won't be taxed coming out of ISA. Is it legal?

LouP25 · 15 January at 10:02PM

Albermarle said:

You could also look at a Lifetime ISA.

Probably best to step back from doing anything until you have a better understanding of how pensions & ISA's work .

I started to educate myself on ISAs today. I wanted to ask you the same question as I asked DiamondLil above. Will it be legal to move my small pension pot to LISA, after I invested it for 2+ year and it increased a bit? I left that employer. The pension wasn't taxed coming in, and won't be taxed coming out of LISA. Is it legal?

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Pay less tax when withdrawing money from stock platforms?

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