I have been investing for a couple of years and on average invest about £5-10 thousand a year and do get a good amount of dividends each year.
I have never had or used an ISA so literally novice at ISA’s.
With the changes to the tax free dividend allowance dropping over the next two years and i have never looked at an ISA before and I believe on an ISA you can use it in the same way as a general investment account but with the maximum deposit of £20 thousand a year.
What I was wondering is if it would be better for me to stop using my general investment account and start using just the ISA for buying and selling to avoid any tax ?
And is there anything I am not aware of to be aware of?
Also when selling and buying shares in an isa does that count towards the yearly limit or is it just new money I deposit that counts to the yearly allowance.
You put pounds into an isa account not stocks. You are allowed to put in 20k a year (currently). With that 20k you can buy and sell as much as you want and any dividends also appear in the isa account as a bonus. Everything in the isa is tax free, no capital gains, no dividend tax, nothing. You can take it out whenever you want, but can only put in 20k in any tax year. You cannot carry over any of the 20k if you missed out a bit before, so put in 20k at once if you haven’t already, then when April rolls around you can put in another 20k.
Unfortunately you will have to sell your shares to move them into the isa as you can only put £££ and not shares.
What I was wondering is if it would be better for me to stop using my general investment account and start using just the ISA for buying and selling to avoid any tax?
-If i were you I’d open an ISA and put your £5,000-10,000 deposits in there from this point on.
-I would also supplement this with selling some of your investments in the GIA and transferring that money from the GIA into the ISA. Essentially you could do a max of ~£10,000 per year as the max is £20,000 deposits into your ISA per year (£10,000 will come from your deposits, £10,000 will come from your GIA).
-Thinking behind this is you seem to have a large portfolio based on your deposits. This will surely hit the capital gains / dividend threshold in the future, so I’d drip it out of the GIA into your ISA.
Also when selling and buying shares in an isa does that count towards the yearly limit or is it just new money I deposit that counts to the yearly allowance.
-No, only deposits into the account. Dividends earned through your ISA + any gains from selling stocks within your ISA do not count towards the £20,000 deposit limit per year into the ISA.
Just on the back of what has been said above. You should be seriously looking into an ISA especially with CGT allowance dropping to 6k for 2023-2024 and then down to 3k for 2024-2025. There are other brokers that offer an ISA for free.
I pay the £4.99 fee already for the access to the additional shares so thats why I was looking at the ISA as its another add on I am technically paying for so was deciding if it was a good way to go forward and thats exactly what I am doing.
The tax man gets enough of my money I am not giving him anymore
No because the £2000 dividend allowance has always been below what my dividends are as I invest dividend and non dividend paying ones and as I say only been doing it a couple of years so not really thought about it but with the allowance going down i would pay tax hence my questions.
I have now opened the ISA and sold £7500 of shares to then buy again in the ISA just waiting for the cash to settle to buy in the ISA
I know it’s not what you asked but in case you had not thought of it and not sure about your personal circumstances, if you are not maxing out pension contributions, for an extra £5 a month you could get the SIPP and gain an extra 20% added by HMRC (or 40% depending on your tax bracket) and get your plus membership paid for as savings for retirement if you don’t need access to the cash.
I spread my savings between Help-to-Save (£50 a month) my ISA (the majority) and I put at least £50 a month into my FT SIPP so my fees are paid for as savings for retirement.
You could also keep £4000 in cash in your plus account and have your plus fees paid through the 3% interest attracted, making it pretty much instant access cash.
