Freetrade Investment ISA

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23

I wasn’t charged a fee moving away from Nutmeg.

24

But this isn’t an official poll on a national scale


It’s just a poll by an FT user who’s interested in what other FT users currently use. There’s no bias unless someone tries to turn it into something it’s not.

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25

For the moment my ISA is elsewhere. Freetrade currently doesn’t offer me what I’d want from a platform that I would currently want to use it as my S&S ISA.

I’m hoping that will change next year as the platform matures, it’s just not ready for me personally to use it as my primary investment platform.

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26

Odd. Both their website and MSE says there’s a £20 fee for transferring to a new provider without cashing out first. Although if you cash out then out that money into a new provider it’ll count towards that year’s ISA limit whereas a direct transfer won’t.

27

That’s interesting can you elaborate a little more as to what is missing?

What if you convert the ISA to a Cash Pot? That’s what I did. No mention of any fee nor did I get charged.

28

Yes, if you convert it to cash, withdraw it and then move it elsewhere you won’t be charged, but then you’re also losing out on the year’s allowance and you’re effectively losing the 25% bonus so withdrawing isn’t a good idea.

29

I didn’t withdraw it. Just converted it to cash and transferred using the Freetrade forms.

30

But you converted it to cash which is the point. So when you transferred it to FT it will have counted towards this year’s ISA allowance.

So sure if you had less than £4K and weren’t expecting to hit £4K by the end of this tax year then yes it won’t matter, and as long as you hadn’t put any money into it in this tax year.

But if you had:

  • If you put money into Nutmeg ISA this tax year then you’re not allowed to put money into FT ISA this tax year
  • If you had transferred the ISA then it won’t have counted towards this tax year whereas turning it into cash will have/do, meaning you’re essentially losing out if you already managed to max it or close to maxing it
  • If it’s LISA you’re referring to like I was, then you’d lose the 25% bonus for turning it into cash whereas transferring won’t (In fact I don’t think you’re even allowed to withdraw the money from a LISA unless you’re using it towards a home/pension)
31

Just a minor note, Interactive Brokers does not offer ISAs

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32

Not a LISA it was an S&S ISA. I didn’t see you had referred to a LISA anywhere, sorry if you did I missed it.

You can hold cash in an S&S ISA. I converted my Nutmeg ETFs and bonds to cash within the ISA and transferred the value via an ISA transfer, therefore it doesn’t affect my ISA limits, (other then the £400 or so quid I had put in on top of last year’s amount).

I’m not sure what we’re struggling with here.

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33

Could you please explain, does REITs have some extra benefits?

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34

I have a SIPP with Pension Bee :honeybee: and Hargreaves Lansdown which I’ve been trying to transfer to Pension Bee :honeybee: but they don’t seem to want to let me go very quickly !

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36

For those lucky enough to be in the higher tax bracket ( 40 / 45 % ) and are happy locking cash away until they’re 55 ( current rules ) a SIPP is a fantastic perk. Putting in 6k in effect could be turned into 10k and can shield you from other liabilities ( eg. child benefit ). It can be in addition to any company pension you may have.

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37

Tl,DR:

  1. REITS dont pay corporation tax, being a special status of company but in return they have to pay out 90% of their rental income as dividends. Known as PID dividend (property income distribution)
  2. The PID is usually one component of the overall dividend in association with profits made from selling real estate (Non PID dividend).
  3. The investor pays normal income tax on the PID component of the dividend (not the usual dividend allowance/tax). An ISA avoids this
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38

Thank you.

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39

Sorry, I had mentioned LISA in my original comment as well and being on mobile it’s hard to keep track of the conversation so I got slightly mixed up.

As far as I was aware if you convert it into cash and then transfer it then it’ll still affect your ISA allowance as it’s not a direct transfer. If I’m wrong then I’d be grateful if you could provide a source, although if the amount is under the £20k limit then shouldn’t really be an issue either way.

40

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41

Thank you! That’s actually really great news especially as it’ll saves £20.

I’ve always been under the impression that you’d have to transfer directly (usually incurring a fee) to keep your ISA allowance, as that’s what it usually says everywhere. It’ll definitely likely be the case for LISAs though.

42

You do. You have to directly transfer the ISA account. The account is the wrapper not the shares themselves. Otherwise you’d have people stuck with immovable ISAs with shares other providers don’t have.

This is the same for all ISA types including a LISA.

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46

The account is the wrapper not the shares themselves.

OHHHH, that makes so much more sense now! Thank you!

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