Choosing between ISAs & Freetrade account’s (GIA)

When I set up my account I was in the middle of something else and when it gave me the option of a free ISA account and something else I just stuck with what I considered the standard option.

What are the pros and cons of the two types of accounts and have I screwed myself over without even realising?

I’m a bit worried about this as I know ISA can sometimes require consistent investment and I wanted to invest as a side hobby and not always put in / take out money

You might have chosen the General investment account. It doesn’t have the tax benefits of an ISA if you exceed the capital gains tax free limit for the year. Neither option has a minimum investment needed so don’t worry :grin:

Here’s a blog that explains it

3 Likes

No, you don’t have to do that.

An ISA is a tax efficient “wrapper” around some investments, which means that you don’t pay tax on any gains when you sell shares in future. Generally speaking, it’s a very good thing. In the other account type (called a Basic account by Freetrade I think, but often called a General Investment Account by other stockbrokers), you may need to pay capital gains tax on the gain when you sell shares in future.

There are a few types of ISA (Freetrade’s is a stocks and shares ISA) and a bunch of rules about ISAs. https://www.gov.uk/individual-savings-accounts/how-isas-work

Only thing I would say is that if

  • you have already contributed to a stock and shares ISA (with someone who isn’t Freetrade) this tax year,
  • or if you had plans to open a stock and shares ISA with someone who isn’t Freetrade before early April (and it doesn’t sound like you had plans like that),

then: don’t make any trades and get in touch with Freetrade support tomorrow :slight_smile: This is because you’re only allowed to contribute to one of each kind of ISA in any one tax year.

3 Likes

ok that was a much more efficient way to explain it

1 Like

I always look for a blog :grin:

1 Like

This is how I was gonna explain it too. Either post Freetrade’s blog or call Vlad. :joy:

3 Likes

Both are equally valid options :laughing:

2 Likes

So if I may ask, why would anyone choose to sat up a ‘standard’ account then? is that just for people who already have an ISA?

I don’t currently have an ISA, last year was my sort of awakening into being very fiscally responsible and thinking exceptionally long term so plenty of this stuff is new to me.

Possibly already have a stocks and shares ISA for this tax year or they are only investing a small amount and don’t think they’ll sell and cross the £11,700 (I think) profit on their shares.
It’s free til April and then £3 a month after that so it is really dependent on your personal circumstances.
Have a good read over the introductory wiki, it explains most things

2 Likes

Saves you from…

1 Like