ISA Questions

[TaurusTheBull]

Hello,

Covid regulations in Malaysia meant that I became tax resident again in UK after many years, so please forgive the following if it seems basic.

I've grabbed my "stocks and shares" ISA allowance for this year and will do similar after April 5th for next.

1. I assume from what I've read that HMRC are not interested in ISA declarations on tax returns, no matter how much is in them or how many deals are done, as long as new funds into them do not exceed the current limit of £20,000 per tax year. I am only interested in this "stocks and shares" ISA. Are my assumptions correct?

2. When I put my next allowance in, after April 5th, will this be in the same ISA account as this year, or is that put into another ISA account such that I can only invest £20,000 from that account rather than what is available from this tax year AND next tax year ?

3. I have some shares in this year's ISA which are the latest batch of many other shares in the same company held outside my ISA. I assume that I don't need to add the ISA shares to the others in order to calculate the average price paid (for subsequent partial disposal purposes, as HMRC doesn't seem to use LIFO for these calculations). Is that corect?

4. I also assume that "Bed and Breakfasting" is allowed when an ISA is involved. So I bought some shares in an ISA today, but if I was to sell some of those same company shares held outside my ISA after April 5th but before 30 dsys have passed, I assume that is allowed since one would be taxable and the other not. Correct?

5. In summary, as I understand ir, there are no limitations on ISA dealing or amount held in an ISA as long as the annual input limits are adhered to. This is important as it encourages me to put what I consider to be the most undervalued, or potentially lucrative, shares into my ISA pot. In my investment pot I am always trying to calculate what is the most tax-efficient way to dispose of profits and/or losses within each tax yesr, which is frankly a pain, as I am sure many would agree.

Thanks

Taurus

[Lootman]

Assumptions 1, 3, 4 and 5 are correct.

Re 2 multiple year subscriptions go into the same ISA account. I have been subscribing to ISAs for 35 years and I only have one ISA account!

[TaurusTheBull]

Thanks Lootman. Goid to know that you haven't got an account for each tax year or it would become mind-numbingly complicated.

[Lootman]

Good to know that you haven't got an account for each tax year or it would become mind-numbingly complicated.

I should have added that I was assuming the same ISA provider each year. If you direct each new year's subscription to a new issuer or broker, then of course you will end up with a different account for each year. Even in that case, you can later transfer and merge the accounts. I have had a number of ISA providers (and PEP providers before them) but over the years have simplified the situation through transfers and mergers.

[Urbandreamer]

Assumptions 1, 3, 4 and 5 are correct.

Re 2 multiple year subscriptions go into the same ISA account. I have been subscribing to ISAs for 35 years and I only have one ISA account!

And I have 3 equity ISA accounts one dating back to ISA's being introduced. The limit is on CONTRIBUTIONS per year. You can have as many ISA accounts as you wish, as long as you only contribute to one of a given type in a given year*.

Is it sensible to have 3 or 30? Possibly not. However it's legal and possible to do so.

This years ISA contribution to my equity ISA was less than £25. It went into the 2'ed oldest ISA that I have and was actually simply moving money from the dealing account into the ISA. It does however mean that I can't contribute to either of the others for the next 5 days.

*Actually it can get more complicated. My wife has opened two cash ISA accounts this tax year, with the same institution. The restriction is actually upon contributions to a provider rather than an account. She has done so because she expects to later transfer one of them to a provider of equity accounts, leaving the other as a cash account.

Further info. You can combine ISA's or simply move them. In the first year you must move the lot. After that it's up to institutions if they accept partial transfers.

[TaurusTheBull]

Thanks. My needs are simple - maximum allowed into my Shares ISA every tax year. Compared to the CGT considerations and intricacies of my investment account, it's relative bliss.

[Alaric]

Compared to the CGT considerations and intricacies of my investment account, it's relative bliss.

As you may also have realised there's no linkage between taxable holdings and those in an ISA, If you sell a taxable holding, it stays sold even if you immediately buy a similar holding in an ISA.

[XFool]

Good to know that you haven't got an account for each tax year or it would become mind-numbingly complicated.

I should have added that I was assuming the same ISA provider each year. If you direct each new year's subscription to a new issuer or broker, then of course you will end up with a different account for each year. Even in that case, you can later transfer and merge the accounts.

Just one small additional point: You cannot transfer between ISAs. i.e. If you withdraw cash etc. from an ISA then it is outside the ISA cover and putting it in another one yourself would be counted as an annual ISA CONTRIBUTION.

To transfer an ISA, without compromising your annual ISA contribution amount, you first establish if a given ISA provider will accept transfers in (even open a new ISA account ready for the purpose) then instruct your new ISA provider to undertake the transfer from your old ISA provider to your new ISA account.

[SteelCamel]

*Actually it can get more complicated. My wife has opened two cash ISA accounts this tax year, with the same institution. The restriction is actually upon contributions to a provider rather than an account. She has done so because she expects to later transfer one of them to a provider of equity accounts, leaving the other as a cash account.

More complicated than that, even. The limit is on subscriptions to "an ISA". Some providers consider that an account is an ISA, so you can only subscribe to one account in a year. Others consider all your accounts with them to be components of a single ISA.
Perhaps less of an issue with stocks and shares, but with cash ISAs it makes a difference. One provider may let you put £10k in a fixed rate ISA and £10k in an instant access one, others prohibit it.

[Fluke]

I have 2 stocks and shares ISA accounts with 2 different providers, am I right in saying that you cannot divide your annual allowance between the 2 providers? e.g. £10k into each. If not does anyone know why? What's so wrong with doing that?

[scrumpyjack]

I have 2 stocks and shares ISA accounts with 2 different providers, am I right in saying that you cannot divide your annual allowance between the 2 providers? e.g. £10k into each. If not does anyone know why? What's so wrong with doing that?

Because those are the rules and the rule is there, I guess, to make it easier for HMRC to check you don't exceed the annual limit.

[Dod101]

Thanks. My needs are simple - maximum allowed into my Shares ISA every tax year. Compared to the CGT considerations and intricacies of my investment account, it's relative bliss.

Someone can confirm, but I would have thought that if you become non tax resident again, you will not be able to contribute to your ISA in that year but you can keep any ISA(s) that you hold.

Dod

[stevensfo]

Thanks. My needs are simple - maximum allowed into my Shares ISA every tax year. Compared to the CGT considerations and intricacies of my investment account, it's relative bliss.

Someone can confirm, but I would have thought that if you become non tax resident again, you will not be able to contribute to your ISA in that year but you can keep any ISA(s) that you hold.

Dod

Yep, that's right. If you are no longer tax resident in the UK, you cannot put any more money into ISAs. However, to avoid the chance of the ISA provider wanting to get rid of you (banks vary considerably in this), it's a good idea not to tell them that you're abroad and make sure they have a UK address for communication. Although in an ISA, you will probably have to declare and pay tax on it abroad. Depending on the country, you may have to declare only the income, but in others, you may have to declare the capital value as well!

Over the years, I must have spent untold weeks perusing the gov.uk sites, reading about the rules on resident, ordinarily resident, resident for tax purposes, domiciled and more recently, Voluntary N.I. contributions. It's an absolute minefield with some info contradicting info on other pages. It doesn't help that other countries have different ideas on resident and domiciled!

Steve - currently keeping a foot in Italy and UK, and my little finger in Poland!

[mc2fool]

I have 2 stocks and shares ISA accounts with 2 different providers, am I right in saying that you cannot divide your annual allowance between the 2 providers? e.g. £10k into each. If not does anyone know why? What's so wrong with doing that?

Indeed you are right, and as scrumpyjack says, it's because that's the rules!

If you really want to do that there is a way round it, albeit with some faff and inconvenience, which is that you transfer £10K from ISA A to ISA B and then put £20K into ISA A.

Note the order. Another rule is that, while you can transfer as little or as much as you like of previous years' subscriptions between ISAs, you are only allowed to transfer the whole of the current year's subscription. That's to stop you using partial transfers to get around the rule you cite.

So, if it isn't there already, generate £10K of cash in ISA A (sell some shares, wait for dividends, etc) and put in a transfer request to the ISA B provider to pull £10K into ISA B from ISA A, and then, after having received acknowledgement of the request, so it's absolutely clear you were transferring "old" money, put your "new" £20K into ISA A.

Be aware that transfers always take far longer than you think they should, and could well require you chasing up the brokers, with each blaming the other for delays. YMMV.

[Fluke]

Yes that makes sense, each provider would (presumably) be showing that you’ve only used half your allowance and wouldn’t prevent you adding more, thereby going over the limit which HMRC would have to somehow track and block/recoup.

Thanks mcfool, bit of a palarva but it’s a workaround.

[swill453]

Yes that makes sense, each provider would (presumably) be showing that you’ve only used half your allowance and wouldn’t prevent you adding more, thereby going over the limit which HMRC would have to somehow track and block/recoup.

No, the point is that one provide would use the whole allowance and the other one uses none of it.

(Transfers from previous years don't affect this years allowance.)

Scott.

[scrumpyjack]

Can't see why you would want to have multiple ISA providers. It would just be a recipe for higher fees. Most charge a flat max fee (with HL it is £3.75 a month no matter how large the ISA, assuming you avoid funds like me)

[mc2fool]

Can't see why you would want to have multiple ISA providers. It would just be a recipe for higher fees. Most charge a flat max fee (with HL it is £3.75 a month no matter how large the ISA, assuming you avoid funds like me)

Eggs, baskets. The reasons for folks using more than one provider (platform/broker in general) have been much discussed already on these boards, no need to rehash.

[scrumpyjack]

Can't see why you would want to have multiple ISA providers. It would just be a recipe for higher fees. Most charge a flat max fee (with HL it is £3.75 a month no matter how large the ISA, assuming you avoid funds like me)

Eggs, baskets. The reasons for folks using more than one provider (platform/broker in general) have been much discussed already on these boards, no need to rehash.

Expensive omelette!

[kempiejon]

Can't see why you would want to have multiple ISA providers. It would just be a recipe for higher fees. Most charge a flat max fee (with HL it is £3.75 a month no matter how large the ISA, assuming you avoid funds like me)

Not necessarily - I opened a ISA last tax year with a new provider iweb. I actually opened an account with iweb in 2020, I paid a one off opening fee of £25 - now £100. The announcement they were raising their fees to £100 was a prompter for me.
iweb do not have any fees for holding accounts with them and only charge £5 dealing fees - the are getting all my new ISA monies.