5 ISA Mistakes You Need to Avoid
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- Опубликовано: 20 окт 2024
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Here are 5 Investing mistakes/ points that are not spoken about too much and little details people miss when using their UK ISA accounts (Individual savings accounts). Everything from looking at how dividends are counted to what can you do with an old account? How does a stocks and shares ISA compare to a cash ISA and are they both flexible? Here's what the rules are right now and I'll evidence each one. As mentioned in the video please check the latest rules on the Gov.UK website and check with your provider too things can and do change over time.
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I only found out this week that cash balances in an ISA pay interest - current;y around 3.25% with Vanguard but likely to rise further after the BoE meet in February.. Not a bad option if you have some spare cash lying around.
Yep definitely all adds up!
Not anymore. Check you email
@@Yesthatisme14 Yep. Now only paying 2.2 from the middle of March.😞
Very nicely put together, Great video as always Toby
Thanks mate!
If you buy a REIT always put it in your IS A first before shares.
Say I invested 16k in a S&S ISA (Foresters Broker) and I want to move all that money to a Lifetime ISA to buy a house, can I transfer the full amount?
No sorry the Lifetime ISA is a maximum of £4k per tax year. And you'd also have to sell your holdings and draw out as cash.
Love the video! You explain it very well. Please I have one question, for 2 years fixed rate cash ISA, can I switch to a better rate ISA within the 2 years? Also what happens after 2 years? do I have to open another ISA and re-start to accumulate the money? Thank you so much
With the lifetime allowance frozen and who knows if it will really be increased again anytime soon, whereas while working it can make sense to use SIPPs rather than ISA's, once your retire it is worth looking at getting as much of your savings as possible into the ISA wrapper. yes you loose 15% tax when you take that money out of your pension fund which puts you back a couple of years investment returns, but after that everything you draw out of your ISA is tax free and it can make a difference as to whether you hit the lifetime allowance or not (expensive ) and that will get more and more likely the longer wages (and therefore pension contributions) are driven up alongside high inflation and the allowance isn't increased.
Well explained Toby
Thanks bud!
Sound advice as ever, Toby. 08:47 - I'm hoping that's future me!
:)
Fell for point 1 myself, luckily "only" cost me about 300 shortfall on my 20K as I realised fairly quickly and after enquiring, was informed exactly as described here. Annoying though! :)
We're always learning! At least you won't make the same mistake next time
Love your content as always mate
Much appreciated
I use a function on my platform called bed & ISA to transfer between my trading account and Isa account without needing to sell (I think they are technically sold and rebought inside the wrapper but it's transparent to the investor).
You do have to check that if there's any CGT to pay because it's a taxable event, but otherwise a nice way to put taxable portfolio underneath the ISA wrapper
Yep great one this Chris, I could have done 10 tips but might take too long :)
Thanks again Toby as great content for many to think about. I'm trying to max my ISA allocation between S&S and cash accounts this FY, although I think the higher return on locked in cash ISA is the better option at the moment for the next FY, although the market is on the move. All a bit of a gamble really and we do not have a wand for sure, keep the content coming, thanks
Thanks Nick and good luck as always mate!
Really good, informative video mate! Nice one 🙌
What will they do though if you go over the 20k limit. I have this year between s&s, cash and lisa. But how will they know?!!
Well your National Insurance number is needed to set up all of the accounts but I'm sure if you went over by £100 maybe nobody will know but then you're asking for trouble!
Thanks for the video. Would be interested in similar one on SIPP account please.
Thanks!
There is another little known rule, I can't remember the name, but if a person dies, the whole content of their ISA can be transferred to the ISA of the surviving spouse without affecting their annual allowance or paying tax.. However, I'm not clear if it is included in the calculation for inheritance tax.
Yes, I was going to mention this too. Effectively the surviving spouse has their annual limit raised by the amount of the balance of the person who died (I don't know what happens if you cross 6 April before the transfer can be implemented).
There is no IHT issue because there's no IHT between spouses anyway.
Can you make a video on beginners guide on ISA?
Check my beginners investing vide it covers a lot of the main points :)
Hi, just wondered what is the best UK stocks and shares Isa for 2023? Thanks
I'll be doing a complete review video in the coming weeks :)
@@TobyNewbatt Excellent, thanks Toby. I did notice the ones in your description but wondered about the rest of them. Looking forward to your next video 👍🏽
You can get flexible ISA’s which allow withdrawals, for example IG
Ah man, I should of watched 5 seconds longer 😂
hahaha all good :)
Mate you deserve more subs !
Slowly getting there mate, growing fast :)
Love your vids. They’re really easy to follow.
Thank you!
What happens if I go over my isa allowance by accident ?
Thanks for the great video. I payba flat rate of £3 a month in fees. Is that too much?
All depends how much you are investing in total as a fixed cost could be better than a variable one
Thanks for the video Toby, very useful information and a great channel. Could I ask, I already have an ISA with Invest Engine and a stocks & shares invest account with Trading 212. When the new tax year arrives is it possible to either change the Trading 212 investment account to an ISA account, transfer shares to a new ISA account, or do they have to be sold and re-purchased under the new ISA banner, thanks again.
Hi Mark! It looks like at the moment you need to sell to cash, and then use the manage section of T212 to move the cash across to the ISA according to their website.
@@TobyNewbatt Thank you for your help
Hi Toby, as someone who is very new to investing I love your content!
I have a question: I have a lifetime ISA with a building society and I am hoping to open a stocks and shares ISA soon, probably with Vanguard - am I allowed to have these 2 ISA’s on different platforms? I know I’m allowed one of each ISA, but just unsure if I am allowed to contribute on different platforms in the same year, even though they are for different ISAs. Thank you!
You can have your ISAs on whatever platform you like. your Cash, S&S, Lifetime etc do not have to be with one provider :)
Thank you for the very informative video.
When you make a sale of your stocks in your NON ISA account and you don't hit the 12300gbp gain (or 2000gbp divident income) you need to report the sale anyways to HMRC even though you don't owe tax? Or you don't need to do anything?
Thanks in advance and sorry for the noob question.
You don’t have to report anything below the allowances. Unless, according to the government website, the total amount of assets was more than 4 times the allowance and youre registered for self assessment
I’m not a progressional tax expert or accountant so please check on the gov website.
Hi, i was about to open a S&S ISA and Junior S&S ISA for myself and kids, investing in the Global all cap fund. However we move to Australia in a year, is it still worth me opening these accounts or should I take an alternative approach?
glad i found you bro!
Cheers for the support
If I reach my £20,000 limit on my cash ISA this financial year, should I stop depositing into it until the start of the next financial year?
Only if you’ve deposited £20k this tax year across your ISA accounts, it doesn’t matter what it’s grown to with interest hope that makes sense?
So don’t worry about the total inside the account it’s all about how much you paid in during a tax year. Hope that helps.
my one is just about to end
but the letter is confusing
tell you do you want to redo it but do not tell you how much and what will happen to the added money you made was like 5.1% bonus
was thinking the added money will just go into the account .... or all of it if I did not contact them kinda scary only bit of info I need
One thing to mention. If you are a higher taxpayer (40% income tax) it may be worth transferring your S&S ISA into your SIPP (Life allowance pending) and claiming the tax relief before you retire. Then when you take your tax free lump sum, you could be a few thousand better off :)
Now we're getting into the juicy stuff thanks Daniel :)
You only have £40k a year allowance to add to your but I think you claim unused allowance back a couple of years.
Up to 3 years back I believe
Just to put numbers against that , if you pay 40% tax while working and put as much as possible of the amount you pay 40% on into a SIPP each year you get that tax put into your SIPP by the HMRC ( but you have to claim that extra 20% on your tax return it doesn't happen automatically) . Then assuming once you retire you don't pay 40% tax anymore , then you only pay 15% tax on that income as 25% is tax free and you pay 20% on the rest after you have exceeded the personal allowance. That's a net 25% gain even before you consider the extra investment return.
Do I just need to be £1 over the higher rate tax threshold and all my pension contributions get 40% back, or do I need to pay the same amount in higher rate tax as I am putting in my pension to achieve that? Say £20k a year in the 40% band and £20k in my pension? Cheers Jonny
Sorry if you covered this question when talking about transferring ISA’s across platforms but does this also include a LISA transfer? I have a LISA with only a bit of money in and would like to transfer it to my stocks and shares ISA account on another platform…wondering if this is possible. Great content as always mate really enjoy learning from your channel.
Hi James, double check with the provider but If you're moving from a LISA to a Cash ISA for example then you're going to have to pay back that 25% LISA bonus surely?
@@TobyNewbatt thanks it’s not a cash ISA is a Vanguard stocks and shares ISA but worth checking with Skipton I think
Please accept my ignorance here but as I'm fairly new to ISAs when you say £20000 per year does that mean you need to open a new one next year or can you have £20000 at end of year one and £40000 at end of year 2 in your one ISA. Sorry but this point is never clear to me. Thanks to anyone that can clear this up for me
No problem Jeremy, i understand a lot of this isn't straight forward.
So, the £20,000 is just a limit that you can PUT IN, per tax year. If you turn that into £1m then thats all good. There's no limit to what it can become in total. It's just £20,000 per tax year that you can put in to your ISA accounts spread across them.
It could be £20,0000 just in a stocks and shares ISA, or you migth have £10,000 in a cash ISA and £10,000 in a stocks and shares ISA. Either way £20k TOTAL you can put in.
Does that make sense?
(im not a financial advisor, accountant etc so please take your time and check the latest rules on the gov website)
@@TobyNewbatt thanks Toby that actually does clear it up.
I have a very important question. I am confused on this one. I opened one Stocks and shares ISA in Jan 2023. I opened a new one in April 2023 in new financial year. I just got an understanding that I cannot pay in both of them at once in a financial year. I am making regular deposit in both ISA in this tax year. Is this wrong?
You can only pay into ONE type of each ISA per tax year. So yes, you can only pay into your new ISA that you started in April 2023, the older one you must leave or you can transfer BUT you cannot add new money to it. I hope that makes sense.
@@TobyNewbatt What if I leave the old ISA as it is and continue with the new ISA but I would again use old ISA next financial year. Is it ok?
Actually I really need the first one because its managed and long term.
Were you doing a vid on why you've moved your SIPP from H&L to Vanguard Toby?
Did that many months ago mate I think either on my vanguard or HL update!
@@TobyNewbatt ah, fair enough:)
Always great video 😊
Thank you!
Lots of really good info.Great video
Thank you!
Great video TOBY god bless you
and to you Hammy
Do you not use freetrade anymore??
Yes bud I do! Update soon I just need to get around to it
Once I reach the FCA protected amount I want to switch to another platform to protect my money
Good idea, I think diversifying providers is also a good step.
Hi, what should I do if my isa nears £85000. Leave it and start a new one? Thanks
Up to you Alan, the £85k FCSC protections is per provider it's really meant to protect cash accounts and fraud, it's not a way to stop you losing money in investments if that makes sense. If you had 4 funds in your ISA, one with Vanguard, ishares, L&G etc. then it is per provider as I understand.
If I had £85k in an ISA, i'd just make sure it was well diversified, but if you don't feel comfortable then you can do whatever you like and open a new one.
I've got a question: Are dividends used as part of the average returns calculation? Let's say the expected dividend yield on an ETF is 2.5%, is that included when people say it has an average yearly return of 9%? If not why not?
Interesting one, I'm not sure on the answer because it depends who is presenting their ETF as an average return of 9%? Are you talking about the returns of the S&P 500 long term?
@@TobyNewbatt Yeah that's the number I see floated around most often for S&P 500. It seems the dividend yield is around 1.8%. So is it 9% + 1.8% or 7.2% stock growth + 1.8% div yield?
@@SamuriLemonX18 makes sense! Well the yield is always changing but the only yield shown for an S&P 500 etf is the current dividend yield. But yes total return including dividends is that 9% ish mark if you go back around a century.
The reinvestment of dividend returns is a huge part of that index and if you look at data without reinvestments the returns are nowhere near as good 👍👍
@SamuriLemonX18 generally it should be considered that a dividend reduces the value ro the stock by a comparable amount
Suppose I had invested 20k in a SS ISA in 2021/2022 and it grew to 35k, what are the tax implications of withdrawing the full 30k? Do I lose the tax benefit on the 15k in capital gains and will I have to pay CGT on the amount above the CGT allowance for the year 2022/2023? Thanks for the great content.
No tax at all once that cash goes inside a stocks and shares isa. There are no capital gains or dividend tax concerns.
You can grow your ISA as big as you like with the maximum of £20l per year of new money.
If you have say £100, 000 in an ISA , I know you can move the whole lot to a new provider.. but can you move part of it..say £15000 to a new ISA as Banks only guarantee £85000 if they go bust...
Check with your provider but i believe you can do part transfers. Yes once you cross £85k if you want to be super safe you might think about different providers thats up to you.
I just opened stocks and shares ISA on trading 212, I put 20k in the ISA then moved it to my invest account, then tried to move it back to the ISA and I can’t cos I’ve maxed out the 20k, so now I have an ISA sitting there that I can’t use until April 🤦🏽♂️
Any advice?
Maybe ask Trading 212 support if you can reverse it if you didn’t mean to do it
Hi Toby. I recently faced a strange issue with ISA. I had an ISA and it matured on 14th November. I received a letter that on 16th November it will be "Free to move". I called bank and asked on 17th November that can I transfer all the ISA amount to my current account and close the ISA? The bank employee as I understood told me that anytime I can take out any amount but the amount I take out of this matured ISA will not be tax free. I was totally lost. It was a tax free ISA. I kept my money for 1 year in this Flexible Cash ISA without taking out a penny. Once it was matured why any amount transferred to my current account would be taxed. I tried my best but I could not understand this system. Can you explain me that? Does ISA mean we have to keep them as ISA forever? I thought one year ISA means agreement should apply in that one year. After that one year my money should be free from ISA with tax free interest. Why any amount taken out from ISA be taxed after maturity?
There is no tax inside an ISA and even when taxes are due it will not be taken there and then it wold have to be done via a self assessment anyway.
It sounds like you were talking to someone who does not know what they are talking about :)
Hi Toby. Thank you for your reply. I think you are correct. I really found your videos very informative. Keep helping people. You are doing a great job. 👍😊
Question toby. I already have paid into my stocks and shares isa with HL this financial year but want to open a new isa one with invest engine. Do i have to wait till after the 5th of april to open the new isa?
You can technically open one…but can’t put any money in until the 6th April so personally I’d just wait! Same as me I’ll be doing the same 👍
@@TobyNewbatt HL regular saver is ok 1.50 per dealing i suppose but why pay that when you can get it free with invest engine. I think i will keep my individual stocks with hl.
Quick question I have a stocks and shares Isa that I drip feed with with my bank once a month . Do I need to transfer that to my new Isa that I want to open with vanguard for the next tax year . Or can I just leave it and stop paying into it , obviously I can’t contribute to two . Cheers loving the content pal 👍
leave it and stop paying in to it is my plan as i also am looking to open a new S&S isa with a fund with Vanguard next year and so I have the exact same scenario as you
@@isctony I need to look into it more but I also need to know if I need to open a new s&s Isa just after the new tax year or just before , I think I will carry on the bank drip steep feed but into a savings Isa , it’s only £50 a month but it adds up .
They used to be called PEPS I think.
My stocks and shares ISA has charges, so do can I add to the ISA in the next tax year or will they just take the charges directly from my bank account? I basically want to do alternative ISAs eg my own stocks and shares ISA one year then a Vanguard the next, and then go back to the stocks and shares ISA the next. Should I just leave some money in the ISA I am not using in the current tax year? I hope you understand my question.
In my case, currently all charges relating to both my Regular Investment Stocks & Shares Investment Portfolio & (directly linked) Regular Investment Stocks & Shares ISA are directly taken from taken from my Regular Investment Account on a pre-notified quarterly basis. But my provider does I understand the option to pay charges directly from a bank account.
@@steves427 Thank you. Also say I had a current Vanguard ISA and wanted to sell some shares from my AJ Bell ISA which I had in the previous tax year, is that allowed?
Can I have 2 different ISA's with separate brokers?? I already have one with Freetrade and I want to open another one in the new tax year with Vanguard.
Yes of course! But once in the new year you can only put in new money to the Vanguard one 👍. And the old ones you can’t put money into but you can still buy and sell inside them
@@TobyNewbatt Thanks for the reply. That's a shame.
Another Q.. you are allowed £1000 interest tax free. If you open a bond in Oct 22 and a new one in April 23 how is the interest calculated so you don't exceed the limit..?
Hi Debbie, to my understanding it's purely based on each tax year, so all that matters is how much interest you made between April and March, and then it resents again back to zero every April.
@@TobyNewbatt thank you so much for replying
Whats the ISA return per year ?
Depends what you invest in?
@@TobyNewbatt any recommendations, only 18 years old, trying to gain as much knowledge as possible. I have LISA, and hoping to invest 4000 this year. Don't know much about stocks and shares ISA. Any Suggestions please?
Thank you for your time, Its greatly appreciated.
@@am10231 I’ve done a complete beginners guide well worth going through that video and taking your time! But I’m short, my personal views is to start with index funds and go from there 👍
@@TobyNewbatt Will do, thanks for sharing your knowledge.
I think it’s worth mentioning that transferring an isa could leave your money out the market for up to 30days. Who knows what could happen to the market in the meantime ☺️
Yes always a risk, could be good, could be bad :P
I maanaged to transfer an ISA with the same positions. The positions were just the same in the new provider
Um, not really.
Really nice video. 👍👍👍
Things are really going to change in 2023 .
I took out £12,300 profit and put into some of my bank accounts, as I will get anything from 4% to 7% .
Just leave and forget.
I max out my ISA and pension every April and been doing for many many years .
Just my opinion, I like to maximum out in April, than during or at the end of the tax year .
The nice £8000 ( tax relief ) I get is very nice .
Only a matter of time the government changes ISA & pensions 😱😭😭😭
Have a wonderful weekend 👍👍👍🥂
Yep time to get things in order, thanks as always!
Higher bank interest rates are good news (unless you have a mortgage and no savings!) but you need to be careful, since if you go over your personal savings allowance you are liable for tax. You probably know this. Basic rate threshold is £1000 / higher rate is £500 (which is met in just 6 months if you have 20k savings @ 5% interest).
@@stevegeek Thanks for message.
After trading & investing for over 20 years .
Iam very clued up .
Always invested in high shares , cypto and commodities.
Do my risk assessment and move to medium and low risk things .
Property over the years are been my best investment.
Not saying I haven't done extremely well on other things . Great have all these portfolio's , unfortunately I wont be able to sell , as I will be Hammered by CGT .
First world problems.
Have a wonderful weekend
@@TobyNewbatt Its Great to hold large portfolio's, not so good to cash out and get some money .
Taxes , CGT, corporate tax .
Unfortunately I have almost meet my pension limit after all these years .
Property cant pay any more into my pension scheme.
I will seek advice from a qualified professional financial advisor ( pension).
The Government likes people to make money and companies, then hammer you in taxes .
This year a bad year and the start of being hammered if you have money and a company.
There is only so much you can do , to keep your takes down .
Have a wonderful weekend
@@stevegeek PS - your right if you have a mortgage.
I have always had intrest only mortgages and didn't have a opinion, had to over pay .
Been mortgage free for over 10 years now .
Over payments the way to go 👍👍👍🤓
I like the comment near the end "Don't worry if you put in 10k and it's worth 20k"!!! Hahaha....chance would be a fine thing!
😂😂😂😂😂
Hello.
Could you give me some advice? What is the best option in choosing ISA account types? I am going to invest about one or two hundred pounds per month in ETFs, as some kind of preparation for pension or just to save up some money from inflation. Also, I am from Ukraine but live in Scotland for 9 months and going to stay here(I have brp for 3 years). Therefore I want to pay taxes and don’t have any issues with the government.
Thanks.
me and the computer engineering boys thinking this was a video on instruction sets 😔
LOL 😂
Also if you get a dividend from a US company you have to still pay a 30% withholding tax
No this is not correct Joe, the rate is 15% and it's not paid by you it gets deducted before it arrives. There is a tax treaty between the US and UK/ Ireland depending if we're talking ETFs or stocks :)
@@TobyNewbatt spot on 👍👍👍