The big guide to ISAs

After listening to your suggestions, out latest guide digs deeper into ISAs!

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Freetrade are about to offer an ISA very soon, their pricing model is great so if you have the appetite go for it.

Other providers are available … i suppose.

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I think LISAs need a slightly more cautious write-up, when considering vis-a-vis a pension.
In bankruptcy, your pension is off limits, whereas your ISAs generally aren’t…

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Had no idea a shares ISA doesn’t protect all dividends!!! Wow that’s a tricky one to look out for on tax returns

Not thought of that, though I presume because you’re unable to withdraw without a massive penalty that would have some bearing?

Not that I’m planning on being bankrupt any time soon! :sweat_smile:

The trustee can sell the roof over your head, so I should think the small matter of a charge to liquidate your ISA is neither here nor there.

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Dare I say it, MSE has a concise writeup of pension v LISA here

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It does, the dividend allowance is not relevant to stocks and shares ISAs - all income from them is tax free (no cgt, no dividend tax).

The article should probably be fixed as discussion of a dividend allowance doesnt belong under that ISA. It does say that but it’s just confusing to discuss that under ISAs.

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It might be worth amending this ISA guide slightly - I think the bit on S&S ISAs is a bit confusing, as it presents a series of costs you might pay when outside an ISA, and attempts to educate the reader about them which is pretty confusing in a context where they don’t apply (see the confusion in this thread over whether there is a limit on tax free dividend income). The message could be far simpler:

You don’t pay any sort of tax on gains, dividends or interest in an S&S ISA.

Funds should probably also be described as a managed collection of shares or bonds, because their distinguishing features is they are a collection of assets rather than just one thing. They also usually charge a fee for holding, which can be really significant.

I’m not sure I’d say that these ISAs are usually managed by a third party - the majority now are probably self-managed using online platforms like Hargreaves Lansdown or the newly launched Freetrade, even if they are used to buy packaged products like trackers or funds. Would be interested to see figures on this but Hargreaves Lansdown is the biggest player in this space at the moment I think.

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Is Monzo looking at offering lifetime ISA’s?

I dont think so but Nutmeg do and you can get 6 months with no fees and £100 with a code if you sign up through my link - pm me if you want it

Personally would love to see Monzo offer one though!

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This is a question that isn’t clear to me.

  • So imagine I pick £2,000 of my Savings. This can come from any account (current, or other provider).
  • I put it in any providers to buy shares.
  • I sell the same number of shares at £2,500 (then making £500 profit).

Can I put back my £2,000 where they were, and these £500 profit in the ISA (Monzo)?
Can I do this until reaching the £20,000 limit (there would be £19,500 left) ?

As far as Im aware a stocks and shares ISA is not generally a flexible one , so you have an allowance of £20000 / tax year , if you put in 2000 you will be left with a fixed limit of another 18000 to invest in that tax year , if you then take out 2000 to put back in your bank account the amount you can invest in the tax year will remain at 18000 as you have already put in 2000

https://www.ii.co.uk/ii-accounts/isa/stocks-and-shares-isas-explained#6

On the other hand if you put it in “any provider to buy shares” rather than a S & S ISA, the profits will be subject to CGT @ 10% or 20% , which is due approximately 9 months after the end of the tax year that they were made in.

not a simple question really without being more specific about other personal circumstances :slight_smile:

Thanks for the answer @iansilversides

I think that does answer the question partially, but what would happen if I use Monzo’s ISA (a normal ISA) to put my benefit (in the case I described, £500)? Would that work, and could I fill my Monzo’s ISA with up to £20,000?

In theory, whatever I earn from shares, that profit is Capital Gains (I don’t receive any Capital Gains from any other source).

So let’s say I save £2,000 from my current job, I decide to invest it in shares, and after a month I sell those shares for £2,500. Would this work in this case?

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It depends where you invest in shares , in a S S ISA you have a tax benefit allowance which relates to other ISA allowances, if its just buying through a provider without ISA wrapper it doesn’t affect your ISA allowance ???

You only get 1 ISA allowance of 20000 a year so in your described case you have already put 2000 in the S&SISA ( ? ) so your cash ISA allowance would be 18000 as far as I know, and every time you repeat this process your cash ISA allowance will reduce in proportion.

You have a 12000 CGT allowance

You have an allowance on dividends should you get a dividend from your shares

You would have a £500 profit on shares , if the 500 kept you under the CGT allowance it would be tax free , but you would have to in theory and legally make a declaration on a self assessment form, whether you do , or HMG are cute enough to catch you for non declared income :man_shrugging:

On reflection, I think what you’re asking is the following.

You invest £2k in shares outside an ISA.
Your investment makes a £500 profit.
If you put the £500 profit in your Monzo ISA, will it be protected?

Answer: No. The profit would be subject to capital gains tax. The payment into the ISA would be completely unrelated.

You’re better off investing in a stocks and shares ISA to begin with. Then any gains are “protected” against tax in the ISA.

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