To ISA or not to ISA, that is the question

Hi all,

Well it’s that time of year and I have a decision to make today but I’m interested in other peoples views just to help form my own. I’m pretty sure the choice will seem quite obvious but le

I currently have a SIPP and LISA with the AJ Bell platform which is a great platform for people with smaller portfolios and savings.

I have 2 choices in regards to my stocks and shares ISA for 2020 / 2021

  1. Open a S&S ISA with AJ Bell for a greater variety of funds/stocks/trusts (at a cost) and use a basic account on Freetrade for additional investments

  2. Open a S&S ISA with Freetrade and carry out all investments on the platform commission free but have less stocks, shares and funds to choose from

In both scenarios I will not exceed the £20,000 limit, in fact, it’s likely I will only accumulate approx £12,000 into the ISA over the course of the coming financial year. Also, other than OEIC funds, I don’t think I’m truly missing out on much just sticking with Freetrade.

In fact, I’d love to bring my SIPP and LISA over to Freetrade at some point.

So I’m leaning towards option 2, does anyone think I should go with option 1? If so, why??
e.g. in both scenarios I will not exceed the capital gains threshold (with or without an ISA on Freetrade).

P.s. I’m following a dividend growth strategy to get the best of both worlds

Cheers!

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I’ve recently closed all my general investing accounts. It’s just a tax headache that I do not want.
My personal choice is that ISA’s are always the way to go even if your investing small amounts initially. Everyone plans to grow and compound their investments to a large amount.
I’ve gone for a Freetrade ISA as it’s only going to get better with more choice. It’s my long term platform of choice :ok_hand:t3:

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Which ever one best meets your needs.

Freetrade would be £36 a year, if both are offering you what funds and shares you want it’s just a case of what’s cheaper to run.

Hi Mani,

The AJ Bell S&S ISA would cost you a custody charge of £30 for your first year ( £12,000 x 0.25%) + £9.95 per trade for stocks and ETF (£1.50 per fund trade).

Freetrade would be £36 flat rate per year for fees and no charge for trades.
As you said you would not exceed the capital gains threshold would a Freetrade general account not be better?

Money wise after 1 stock trade Freetrade would be better value.

Hi @Rust,

Thanks for the breakdown, I think everything is pointing to Freetrade as the option to go for. As I mentioned in my original post, I’d also like to move my SIPP and LISA over when Freetrade make these available (to save on cost as you’ve pointed out).

In regards to your general account point… I thought the same but I discovered that you cannot move your portfolio into an ISA at a later date should you happen to exceed the capital gains threshold in the future. This means I’d have to sell everything and re-purchase in the ISA account which just sounds like a massive waste of time! So that is why, despite being well within the capital gains boundaries, I’ll start and continue my investment journey with Freetrade using their ISA. Does that make sense? or is there still reason to stick to the general account? :thinking:

I agree with you about having to sell your shares in a general account and then rebuying in the ISA that it may be better to just start in the ISA, not just because of the potential of capital gains but if you reach that amount of investments it would likely mean using an entire years ISA allowance to transfer (I do not think you are allowed to claim for previous years allowances).

That’s a really good point.

If I understand you correctly, what you’re saying is when the time comes suppose I could transfer into the ISA at a later date, I’ll end up using most if not all of that years allowance just with the transfer. Good shout!

Well, that settles it… An S&S ISA with Freetrade it is… I’ve missed the market today so it’ll be a fresh start on Monday :grin: :+1: