ISA questions

You need to consider other sources of income here too e.g. selling a second property could take you over the capital gains threshold. There’s more details here: https://www.gov.uk/capital-gains-tax/rates.

HMRC gives some useful information more generally about the pros & cons of Stocks & Shares ISAs here: https://www.gov.uk/topic/personal-tax/savings-investment-tax.

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£3 a month for an ISA you can’t go wrong in my opinion when your regularly investing long term.

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Many people have already explained that there are no cons with ISA, but to give you a better perspective on why the government runs this scheme, it is important to understand how they get tax revenue. You probably noticed that pension schemes have been “nerfed” significantly under Osborne’s watch due to no short-term tax revenue from them (i.e. the government will be getting tax revenue when you are old, not today). ISAs, on the other hand, give the state tax money now, because you pay tax on your way in, not your way out. This is why ISAs have been made slightly more lucrative in the recent years, to motivate people to slow down on their pension contributions and incentivise them to pay taxes now, whilst making their future gains tax free (win-win strategy).

In any case, pension, as a saving vehicle, is still (arguably) better than an ISA, but that is a different topic altogether :slight_smile:

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I received a small dividend today and there was a (less withholding tax)

Freetrade SIPP anyone? :slight_smile:

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That’s the tax you pay on US shares. There is no stamp duty when you buy them, but 15% tax on divs

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That is on all US stocks, paid at source before it gets to the UK. Unavoidable.

SIPP - Private Pensions :wink:

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Ah right it’s all starting to make sense :+1:t4:

The withholding tax is because it’s a US stock, and would apply even under an ISA. It’s not something you have to pay or report to HMRC; the dividend you received already has the 15% taken out of it.

In addition you’re also suffering currency exchange losses, so if you want to optimise your dividends, you might consider limiting your stock picks to UK companies.

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Louis the rate your going you will be getting daily dividends in the near future and have to have a whole accounts department if you don’t get your portfolio in that ISA :slightly_smiling_face::rocket:

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Yep - I think you will have to employ a dividend admin. No - make that 2 - one to track ex-div dates and one to track payment dates :rofl:

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:joy::joy: you can tell Iam a nooooooob

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Very well explained. An ISA also offers huge advantages at retirement age. Coupled with pension income it gives you the flexibility to get a tax efficient source of income.

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We’re all nooobs. Nothing wrong with that :crazy_face:

Why do ISA accounts have a cost when non ISA accounts don’t .
What’s so special about ISA’s to warrant a charge , I take it you can do the same as you can in a normal stock/share account ( buy individual stocks ,etf, funds etc) .

Is there additional admin costs in a ISA with the tax relief benefits ??? .

Being a beginner Im not too clued up on ISA’s but what I can see there the same as a normal account but with tax relief …

Thanks

There’s nothing inherent about them that would require a charge; some other platforms offer free ISA accounts.

But platforms have to make money somehow. The free platforms charge for trades. Freetrade has free trades (hence the name), but charges for the ISA.

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Freetrade needs some revenue streams to start with (rent, salaries and other stuff). Subsidising basic accounts seems like a strategy with a good potential for customers to also get ISAs - even with a fee customers are likely to be better off and it makes sense for Freetrade to get a share of that benefit in order to grow and improve its services.

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Thanks for your replies ,
I wasn’t really aiming my question at Freetrade as the ISA fee’s here are next to nothing compared to other platforms, and the free trades makes Freetrade extra attractive .
It’s more in general other platforms charge a substantial amount more for their ISA accounts as well as charging trade fees .
Just wondered why ISA’s in specific get targeted for the heavier charges .

If there’s no real different operating costs for for the broker on either account types I guess they just charge more as they know most people favour them for the tax reliefs . More demand = charge them more .

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Maybe Alex could elaborate but I think you are exactly right - if people are ready to pay more, they will be charged more :slight_smile:

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There’s quite a lot of extra admin work involved when providing ISAs, for example HMRC require us to do all of the reporting that’s necessary to enable them to ensure that customers are following the rules that apply to ISAs e.g. only paying cash into one Stocks & Shares ISA per year, only depositing up to 20k each year etc.

We believe that a monthly fee is the fairest, most transparent way for us to charge for ISAs, which enable you to benefit from potential tax savings on your portfolio with Freetrade :moneybag:

We’ve explained the benefits of ISAs & the rules I mentioned in more detail here -

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