The British ISA

[MrFoolish]

Moderator Message:
Moved here, leaving a link, to allow the more general discussion to continue. - Chris

According to the Guardian, Hunt may introduce a "British ISA" at the next budget. This will incur no stamp duty for purchases of British shares.

As you HYPers only buy British shares, it's time to wave the flag and do your duty by paying no duty.

[monabri]

Saving a full 0.5% of tax when shareprices can fluctuate such a lot in just a day. It's not much of an incentive.

[tjh290633]

Some foreign shares do not attract stamp duty. I believe that the Republic of Ireland charges 1% stamp duty. My Australian shares, WDS, S32, etc. do not attract stamp duty. It's a small difference, and not having to pay a tax is always welcome.

TJH

[Lootman]

According to the Guardian, Hunt may introduce a "British ISA" at the next budget. This will incur no stamp duty for purchases of British shares.

As you HYPers only buy British shares, it's time to wave the flag and do your duty by paying no duty.

Abolishing stamp duty would be helpful in any event but that alone would not make me buy UK shares when there are better opportunities overseas. Include ITs and I am in though.

An increase in the current £40,000 per couple annual subscription limit would also be welcome.

[csearle]

Any practical reduction in the cost of buying shares would be welcome.

As an aside all three of my worst investing decisions involved ITs. Things are not simple. C.

[Grumpsimus]

The British ISA seems to be the worst sort of political gimmick. What is it meant to achieve?

Would people really want to buy more shares if the the cost was reduced by half a percent. It would be nice , but hardly a game changer.

How would 'British Shares' be defined? I assume they would have to be listed on the London Stock Exchange in order to meet ISA rules. Unfortunately, most shares listed are not particularly British, according the LSE for the FT100 82% of the income comes from overseas. BHP is listed and has an office in London, but I believe all its operations are overseas. BATS gets 95% of income from overseas.

It would also create a problem for brokers, with different rules for 'British Shares' and foreign shares in an ISA and different rules for unsheltered accounts. This would require adjustments to their systems, not insurmountable, but just another complication for what is likely to be very little if any gain.

[XFool]

The British ISA seems to be the worst sort of political gimmick. What is it meant to achieve?

Yes, agree.

I wish they would leave ISAs alone. When originally introduced they were fiddly, over the years they became simplified and straightforward: One cash ISA and one share ISA. That is where it should have been left, they were perfectly successful at that point.

Now it's those two plus 'Lifetime' ISAs and this latest nonsense. The trouble is, following its simplification over the years, the ISA 'brand' became so successful and well known it is now being used by the current government as a popularity booster. The risk is it will all end up in the usual British confusion and muddle rather than being left alone as something that just works.

[Gerry557]

Can we define British shares?

Vodafone appears to be British but pays dividends in euros and the main portion of revenue is Europe. Lots of similar shares.

I donk think telling insurance and pension companies and the like to invest in bonds not equities helped much either.

As always the devil will be in the detail. Hopefully being able to use more than one broker in the future will help too. So you might be able to split investments.

I can't see them upping the limits either however nice that might be.

[Dicky99]

With regard to retail investors tendency for home bias, of which I'm guilty, I agree with this comment...

Hargreaves Lansdown’s Streeter adds: “Simply lifting the ISA allowance, without creating a new product, would result in a boost to investment in UK equities anyway. It would also still offer the potential for diversification, helping bolster retail investors’ resilience.

https://portfolio-adviser.com/platforms ... tish-isas/

[evilbungle]

Would people really want to buy more shares if the the cost was reduced by half a percent.

Well as a direct consequence then yes I would likely invest more - albeit only 0.5% more. (Like I am sure most people) I invest a set amount of money and the number of shares I get are that amount minus stamp duty and fees - So in this instance the amount invested would be equal to the stamp duty savings (Obviously depending on the share price - a share over 100GBP for example would unlikely change the volume brought - but one under 1GBP would see several more actual shares bought.

Obviously - Is this going to make a difference or help in anyway? is a different question entirely.

[moorfield]

Saving a full 0.5% of tax when shareprices can fluctuate such a lot in just a day. It's not much of an incentive.

Not really. And real HYPsters as we know only pay it once anyway. By far the much bigger drags on income are (1) their brokers' custody fees, mine increased +20% a few years ago and now that I am seeing more of their flashy ads on telly I fear will do again and (2) their own keyboards.

[stevensfo]

I can't remember which ones, but I'm sure I have quite a few ETFs or ITs where I didn't pay any stamp duty at all.

Did it make me buy more?

Not at all!

Having said that, there may be cases where someone is spending a 'much' larger amount than my piddly little sums, for example, to buy preference shares for income.

In which case, it may be a more interesting proposition.


Steve

[Lootman]

I can't remember which ones, but I'm sure I have quite a few ETFs or ITs where I didn't pay any stamp duty at all.

Did it make me buy more?

Not at all!

No stamp duty might encourage more short-term trading. Now that commissions are much lower, and trivial for larger trades, and spreads are tight, it is really stamp duty that deters day trading.

ETFs have no stamp duty, nor ITs domiciled outside the UK, nor AIM shares, nor anything foreign of course.

[MrFoolish]

Do the funds themselves (ETFs or ITs) have to pay withholding taxes on the dividends from the US shares they own?

[scrumpyjack]

In the 1990 Budget, the Conservative administration announced that stamp duty on shares would be abolished late in 1991–92.

That would have been on all share purchases not just ISAs

It never happened!

Yawn.

[Lootman]

Do the funds themselves (ETFs or ITs) have to pay withholding taxes on the dividends from the US shares they own?

Yes although London-listed funds that are domiciled in Ireland, like pretty much all the popular ETFs, may have a more favourable tax treaty and withholding rate than the UK. Ireland itself imposes no additional tax withholding on UK fund holders.

The average dividend yield on a US-based ETF is currently 1.32% and so the 15% tax withholding only costs you about one fifth of one percent a year.

[Grumpsimus]

There was a little more detail about the British ISA in an article in the 'i' newspaper today.

Apparenty, you will be able invest another £5000 in your ISA, if you invest in shares listed on UK stock market. The idea seems to be to boost activity on the UK stock market. The article was doubtful if this would really make much difference. It appears only 15% of ISAs actually get to £20000 anyway.

[Lootman]

There was a little more detail about the British ISA in an article in the 'i' newspaper today.

Apparenty, you will be able invest another £5000 in your ISA, if you invest in shares listed on UK stock market. The idea seems to be to boost activity on the UK stock market. The article was doubtful if this would really make much difference. It appears only 15% of ISAs actually get to £20000 anyway.

Amusingly this is how the original PEPs started in 1987. The subscription amount was higher if you bought UK-listed shares than if you wanted funds or foreign shares.

Full circle, I love it. I would do an extra 2 times £5000 a year as my wife and I always max out. The problem is more finding a UK share I want to own - will ITs be included?

[Dod101]

There was a little more detail about the British ISA in an article in the 'i' newspaper today.

Apparenty, you will be able invest another £5000 in your ISA, if you invest in shares listed on UK stock market. The idea seems to be to boost activity on the UK stock market. The article was doubtful if this would really make much difference. It appears only 15% of ISAs actually get to £20000 anyway.

Amusingly this is how the original PEPs started in 1987. The subscription amount was higher if you bought UK-listed shares than if you wanted funds or foreign shares.

Full circle, I love it. I would do an extra 2 times £5000 a year as my wife and I always max out. The problem is more finding a UK share I want to own - will ITs be included?

Well ITs are shares just like any others. Hope so.

Dod

[Lootman]

Amusingly this is how the original PEPs started in 1987. The subscription amount was higher if you bought UK-listed shares than if you wanted funds or foreign shares.

Full circle, I love it. I would do an extra 2 times £5000 a year as my wife and I always max out. The problem is more finding a UK share I want to own - will ITs be included?

Well ITs are shares just like any others. Hope so.

You might think so but back in the 1980s ITs were lumped in with funds and so disallowed at the higher subscription level.

ETFs did not exist back then. They are London listed but Irish-domiciled.