Author Topic: UK S&S ISA question  (Read 4537 times)

CodAlmighty

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UK S&S ISA question
« on: May 13, 2016, 03:58:22 AM »
Hi all, I hope someone can help.

I am currently stashing money away in the Vanguard LS80 index fund using the HL platform. Currently, the money I'm saving is being put into a S&S ISA, which I can do until I have 15,240 in there. The way things are going I will have exceeded this allowance by September, but I still want to keep putting money in to the Vanguard LS80 fund. Does anyone know how I would do this?

Any help would be appreciated

Playing with Fire UK

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Re: UK S&S ISA question
« Reply #1 on: May 13, 2016, 04:23:47 AM »
Open a Fund and Share account with HL (not a tax wrapper, but you have a 5k allowance for dividends and can harvest capital gains when they get significant) and buy it there. You could also buy it in a pension.

frugledoc

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Re: UK S&S ISA question
« Reply #2 on: May 13, 2016, 04:30:29 AM »
Do you know that HL charge an uncapped platform fee of 0.45% for holding funds but it is called at 45 per year for ETFs.  Because of this if is much cheaper for you to buy 80% VWRL and 20% VGOV if you are lump summing your ISA allowance annually

Doubleh

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Re: UK S&S ISA question
« Reply #3 on: May 13, 2016, 06:23:03 AM »
Plenty of options much cheaper than HL. Halifax is 12 per year platform fee and 2 per year for regular investments. Website not the slickest but does the job. Other platforms with a low %age fee may be marginally cheaper for a very small balance but how much can you save off 12? There's a good guide on the excellent monevator blog if you Google for monevator broker.

Don't forget next year you'll be able to save 20k in your isa

Rightflyer

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Re: UK S&S ISA question
« Reply #4 on: May 13, 2016, 09:39:34 AM »
Following.

(I'm interested to know what the best value options are for Share Dealing accounts and SS ISA's are in the UK.)


 
« Last Edit: May 13, 2016, 09:42:09 AM by Rightflyer »

cerat0n1a

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Re: UK S&S ISA question
« Reply #5 on: May 13, 2016, 01:29:28 PM »
Following.

(I'm interested to know what the best value options are for Share Dealing accounts and SS ISA's are in the UK.)

The monevator article referenced earlier is pretty much the definitive answer on this. The Motley Fool Broker comparison is also good.

I'd suggest that anyone able to tuck away their full ISA allowance each year might want to consider holding their funds in multiple places - 100k here, 100k there etc. Apart from minimising issues around websites crashing, online fraud etc. you also benefit from the 50k+ protection on investments that the FSCS provides.

frugledoc

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Re: UK S&S ISA question
« Reply #6 on: May 13, 2016, 03:01:15 PM »
I'm very comfortable keeping my entire stash with Hargreaves lansdowne. 

CodAlmighty

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Re: UK S&S ISA question
« Reply #7 on: May 18, 2016, 05:00:58 AM »
Thanks everyone for your helpful replies. I will get on the phone to HL nearer the time and open a Fund and Share account as Playing With Fire UK has suggested.

With regards to the fees charged by HL, I'm quite happy to pay slightly over the odds for a platform that I can find my way around as my knowledge is very limited when it comes to investing. When my stash is big enough that 0.45% is becomes a considerable amount of money (hopefully at the start of next year) I will definitely reconsider, and Halifax sounds like an attractive offer. At the moment I'm just starting out though.

And as for the increase in ISA allowance next year I plan to take full advantage, as I'm fortunate enough to be in the age range where I will be able to open a Lifetime ISA.

Playing with Fire UK

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Re: UK S&S ISA question
« Reply #8 on: May 18, 2016, 07:15:08 AM »
Lifetime ISAs aren't a slam dunk. A pension is better for some people. Are you planning to use the LISA for a first house purchase?

CodAlmighty

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Re: UK S&S ISA question
« Reply #9 on: May 19, 2016, 02:55:57 AM »
Lifetime ISAs aren't a slam dunk. A pension is better for some people. Are you planning to use the LISA for a first house purchase?

No I bought my first home in 2013. Currently my plan is to put the full 4k per year into the LISA so that I receive the maximum bonus each year and build up a tidy sum of money that I can withdraw tax free when I retire. I can then use the rest of my ISA allowance in S&S. It seems like a good way to diversify so that I don't have all of my eggs in one basket.

Playing with Fire UK

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Re: UK S&S ISA question
« Reply #10 on: May 19, 2016, 03:33:53 AM »
Lifetime ISAs aren't a slam dunk. A pension is better for some people. Are you planning to use the LISA for a first house purchase?
No I bought my first home in 2013. Currently my plan is to put the full 4k per year into the LISA so that I receive the maximum bonus each year and build up a tidy sum of money that I can withdraw tax free when I retire. I can then use the rest of my ISA allowance in S&S. It seems like a good way to diversify so that I don't have all of my eggs in one basket.

As in diversify the concerns with pension access age/future tax rates or wanting to withdraw more than the tax free allowance / low tax band rate in a bumper year in retirement? Makes sense.

If you are paying 40% tax now (and if not then major props to you on stashing away so much), then just check the maths on using a pension for your higher rate pay and paying basic or no tax later; vs a lifetime ISA. For me the pension comes out way ahead, even given some government messing. It can also be a winner on 20% tax + 12% NI if you have a decent work pension and can salary sacrifice. YMMV

Butterfingers

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Re: UK S&S ISA question
« Reply #11 on: May 19, 2016, 07:49:44 AM »
I'll second the pensions recommendation. Even if you're a basic rate taxpayer it's often a better deal. If your company allows salary sacrifice then it's a no-brainer. The only issue is the length of time before you can get your hands on the lucre currently it's ten years before the state pension age. So your early retirement plan needs to allocate sufficient funds in ISAs to bridge the gap between retirement and 57 or 60 or whenever it is that you'll be able to access your workplace pension.

Remember too that workplace pensions now allow a 25% interest-free drawdown either immediately on reaching pension age, or if you decide not to take the lump sum at the beginning then you get 25% of each (smaller) withdrawal tax-free. Makes it even more attractive.

Run your own numbers, but I'd be surprised if boosting your workplace pension doesn't perform better.

Playing with Fire UK

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Re: UK S&S ISA question
« Reply #12 on: May 19, 2016, 08:29:42 AM »
Yep, the only reason I'm not saying 100% PENSIONS PENSIONS PENSIONS is the uncertainty over access age and future tax meddling. Of course there's no guarantee that there won't be LISA meddling as well, hence a LISA being a hedge that there will be different meddling between the two.

I found The Financial Zombie's article http://www.thefinancezombie.com/2015/11/the-bridge-to-financial-independence.html useful in planning for the gap between FIRE and pension o clock.

Also, if I was below the 40% tax threshold but thought I'd be over in a few years and there weren't going to be more pension input changes (wouldn't bet on this), I'd be thinking about maxing the ISA now and then hitting pensions later.

With the dividend allowance and capital gains allowance being so generous, if you are early in your journey CodAlmighty it will be a while before the ISA wrapper makes a difference (although record keeping is easier).

Butterfingers

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Re: UK S&S ISA question
« Reply #13 on: May 20, 2016, 07:34:40 AM »
Excellent link, thank you. It clarifies some of my muddy thinking on the issue.

Playing with Fire, how are you factoring in the state pension in your planning? Ignoring it completely and count it as a nice bonus if and when it arrives? That's my current strategy, but I'm beginning to wonder if I should include it in my FIRE plan to cut the time I have left working for the Man.

Playing with Fire UK

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Re: UK S&S ISA question
« Reply #14 on: May 20, 2016, 01:36:25 PM »
You're welcome Butterfingers.

Before the news about the impending loss of Class 2 NI contributions I was planning on making sure I was entitled to a full SP (modelled from age 70 in 2053) in ; but also increasing my expected expenses to account for increased care costs. This also meant that without any SP I'd have a tolerable level of living expenses but no cruises and champagne baths for me (at 4%; if the stock market is averagely kind I'll have plenty of champagne baths).

I have a level of uncertainty following the loss of Class 2 NI contributions - I'm not sure I want to arrange 'self employment' in FIRE and pay meaningful amounts of NI contributions for something that I don't have total faith in. I think it's highly likely that there will be a state pension of some sort; but I'd expect that the earning power will diminish, access age will increase and I could believe some level of means testing.

I also have a separate ('parachute') spreadsheet that considers what would happen if I got sick/sacked/whatever right now and then couldn't work again. I assume that I'd have access to the SP from 68 and that the NHS would take care of medical needs and I'd spend my stash down towards the age of 100 (no kids so no inheritance issues).

I'm leaving my assumptions as they are now (SP at 70, reduced by care costs or means testing); but I'm also assuming that I won't get any increases in pay or other income sources. I'll look at it again when I'm within a couple of years of FIRE and try to guess which way the political wind is blowing. I'd rather respond to a change in policy with a few hours a months paid work post FIRE than OMY to account for the combination of a future policy change and the markets being shit.

dreams_and_discoveries

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Re: UK S&S ISA question
« Reply #15 on: May 21, 2016, 09:36:40 AM »
I'm ditching HL as we speak, the charges have just got too much, and the service is pants - the last two requests they have done incorrectly as they didn't read properly (they insist on paper forms for employer contributions, but don't read them fully when they have > 1 change.).

Now going ETL only in Fidelity, which seems value for money for me, and the percentage fee for ETF dealing allows me to keep a varied portfolio.

As for State Pension, I've modelled mine in on current projections (have 100+ a week guaranteed at the moment). WHo know what will happen, I'm a bit more concerned about SIPP access dates than state pension date itself, especially if the later keeps rising and the former is pegged 10 years previously. Hence in a few years I'm likely to stop contributions to my SIPP, and go ISA/Taxable only to bump these up.

As for LISA's, they may be a good hedge, but I don't think I'll partake - I need as much ISA allowance fas possible or my planned 18 years until SIPP access is allowed, locking away cash in a LISA doesn't fit well with my personal plan (and SIPP is more profitable anyway).


Butterfingers

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Re: UK S&S ISA question
« Reply #16 on: May 24, 2016, 03:17:46 AM »
Thanks PwF. I think I'll continue to consider the SP null for FIRE planning purposes, and use it as a hedge against care costs.

The loss of Class 2 NI contributions will also affect my SP. Currently I have the option to top up 8 years of NI from when I was abroad, at around 700 for each year. I would only have to live a handful of years beyond SP age to make that worthwhile, so it seems a no-brainer. But even then that would only give me 26 years of NI contributions if I pull the RE ripcord in 2030. Perhaps the odd bit of paid work for the next nine years might be the way to go.

@d&d: I don't think the LISA works very well for FIRE. I see it as "Help to Buy Plus" (increased contribution limit, bonus paid annually), with the fallback that you can accidentally save for retirement if the relentless gallop of house prices leaves you floundering in the dust. But even for people who aim to retire at the SP age, I'm not sure why you'd use a LISA over a SIPP. Now, if they were to reduce the earliest payout age to 50 I'd suddenly be a lot more interested.

Playing with Fire UK

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Re: UK S&S ISA question
« Reply #17 on: May 24, 2016, 04:37:26 AM »
Oh Buftterfingers, I will dream tonight of them lowering the access age of a LISA to 50. That would be an epic turn up for the books.

I see the LISA 60 access age and 25% bonus to post tax pay as a signal to where pensions might be going. My read on the noise before the most recent budget was that SIPPs were in imminent danger of being replaced with ISA-type pensions, that was pulled because it was unpopular before the EU referendum; I'm expecting it to be back on the table next time around.

Topping up NI years is a winner, with the tiny assumption that the entire system doesn't fall apart and that you don't think you have a shorter life expectancy, I think you have until 2019 to top up years at the current rate and 2025(?) to fill in the gaps at the possibly higher rate. My plan (not to be confused with procrastination) is to leave it to the last minute before any decision point, on the basis that if I paid to top up years now, and then announced in 2024 that the SP was going to be (partly) means tested, I'd be pretty pissed. The other thing is that by buying future years' NI contributions, you will be buying eligibility for certain benefits. While I have no intention of claiming them, I know for certain that I won't need cover for a disability allowance ten years ago (should something horrendous happen), but I could need it in the future [I might have this wrong as I don't know fully how it works and don't plan to find out]. Also, as years progress I'll have more information about how long I can expect to live (medical advances, disease progression, gene sequencing (?) )

By 2030 I think we'll have a better idea of whether the state pension is being cannibalised. I support the folks that want to never do a day of paid work again in FIRE (or don't want to fall foul of the IRP), but I suspect that I'll end up doing something in exchange for money in FIRE, so I'm happy to plan on that basis. I'd be more upset if I ended up paying more than 30 years contributions than if I ended up a year short or doing some reasonably fun work to get another year.

Perhaps we can hire each other for consulting work at a generous hourly rate?

I'm stuffing my SIPP to the brim now, partially hoping that if they bring in some unpleasant new rules they'll give me the option of freezing the SIPP under the old rules (including age access), but mostly to take advantage of that lovely tax deferred money. I can but hope.

Butterfingers

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Re: UK S&S ISA question
« Reply #18 on: May 24, 2016, 05:20:31 AM »
I see the LISA 60 access age and 25% bonus to post tax pay as a signal to where pensions might be going. My read on the noise before the most recent budget was that SIPPs were in imminent danger of being replaced with ISA-type pensions, that was pulled because it was unpopular before the EU referendum; I'm expecting it to be back on the table next time around.
Perhaps salary sacrifice for work-based pensions will also come under assault when HM Govt doesn't have a referendum to win. At the moment you can sacrifice to the point where you're eligible for (more) tax credits, which seems contrary to the spirit of the system. They really should close that loophole.

Quote
Topping up NI years is a winner, with the tiny assumption that the entire system doesn't fall apart and that you don't think you have a shorter life expectancy, I think you have until 2019 to top up years at the current rate and 2025(?) to fill in the gaps at the possibly higher rate. My plan (not to be confused with procrastination) is to leave it to the last minute before any decision point, on the basis that if I paid to top up years now, and then announced in 2024 that the SP was going to be (partly) means tested, I'd be pretty pissed.

No shit, I'd be fuming. I'll save up the extra contributions in a high-interest cash account (in as far as such a thing exists nowadays) until 2019, then make the call. It's always going to be a gamble, but hopefully any future changes (like means-testing) will not be retroactive. Planning for a SP age of 70 around 2050 seems reasonable, or as reasonable as any punt in the dark can be.

Quote
Perhaps we can hire each other for consulting work at a generous hourly rate?
Yes! I need to think of a job title. Home Brew Consultant?

Playing with Fire UK

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Re: UK S&S ISA question
« Reply #19 on: May 24, 2016, 07:22:48 AM »
Quote
Perhaps we can hire each other for consulting work at a generous hourly rate?
Yes! I need to think of a job title. Home Brew Consultant?

Epic! I genuinely need a home brew consultant - I rushed the last batch and bottled it too early (going on holiday), when I opened the first bottle the jet of beer hit the ceiling. Just grateful I did it over the sink.

I can offer BBQ, fire risk assessment, and spreadsheet building services.

Agreed that salary sacrifice has a limited lifespan - the tax credits thing is crazy. I'm trying to take a Zen approach in that at some point the legislation will go against me, but being able to pile pre-tax money into a SIPP now will balance it out.

dreams_and_discoveries

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Re: UK S&S ISA question
« Reply #20 on: May 24, 2016, 07:47:27 AM »
Yeah - my bets are on the Pension Isa limit increasing, pension limit decreasing over 5 years then all pension  benefits being grandfathered in and only pension Isas available for new cash in 10 years.

Then the government will have two schemes running for 50 years....with the tax defered pensions dwindling....

But who really knows what will happen?

I'm fairly certain I'll manage to get all I need in tax defered pensions over the next 4 years.

Butterfingers

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Re: UK S&S ISA question
« Reply #21 on: May 24, 2016, 08:29:45 AM »
Quote
Perhaps we can hire each other for consulting work at a generous hourly rate?
Yes! I need to think of a job title. Home Brew Consultant?

Epic! I genuinely need a home brew consultant - I rushed the last batch and bottled it too early (going on holiday), when I opened the first bottle the jet of beer hit the ceiling. Just grateful I did it over the sink.

I don't actually have any home brew experience, but it's something I'd like to get good at once I have some more time. I could certainly do with a BBQ consultant any recommendations for purchasing (or building) one for a novice?

Playing with Fire UK

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Re: UK S&S ISA question
« Reply #22 on: May 24, 2016, 10:34:04 AM »
I don't actually have any home brew experience, but it's something I'd like to get good at once I have some more time. I could certainly do with a BBQ consultant any recommendations for purchasing (or building) one for a novice?

Decide what fuel you want (gas, charcoal, or wood if you have a supply). The best way of deciding is going to loads of BBQs at friends' houses over the summer, making sure you arrive before they light it and helping to cook, and seeing how good the food tastes. Personally I think a gas BBQ is just an oven and charcoaled food tastes amazing, but I'm gracious enough to allow others to have a differing opinion. I also think that smoke and ash taste delicious, that building a fire is most of the fun and waiting for the coals to warm up is beer time.

You can totally build a BBQ, get some bricks or breeze blocks, build three of the four walls of a rectangle (so that the prevailing wind goes toward the back wall, if very windy), pop in some metal strips or a rack (lean this slightly towards the back wall so that the coals don't fall on your toes), continue to build up, add another couple of racks (for the cooking surfaces). You can modify to add a cooking hood which will make cooking faster (and avoid burnt on the outside, raw in the middle).

You can also make one with a metal bucket, drill and some old racks but the bucket BBQs look so sad to me that I can't recommend them unless you want something to carry to the beach.

For buying, I would start with a barrel type, (search for barrel BBQ) for pictures, you can get one for around 25 new, and the lid can be used as a lid for faster cooking. Pay attention to the length of the legs - the lower ones are great for sitting around like a bonfire, but taller ones better for standing up and grilling.

Yeah - my bets are on the Pension Isa limit increasing, pension limit decreasing over 5 years then all pension  benefits being grandfathered in and only pension Isas available for new cash in 10 years.

I like the idea of the pension benefits being grandfathered in, fingers crossed. I agree they'll carry on with limiting contributions - lowering the earnings level at which your max contributions drop to 10k until it includes everyone and then squeezing the 10k until it goes to nothing.

Butterfingers

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Re: UK S&S ISA question
« Reply #23 on: May 31, 2016, 01:57:06 AM »
Thanks for the barbecue recommendations, PwFUK. Charcoal is definitely the way to go now let's hope for good barbecuing weather.

On pensions, I'm about to start drastically upping contributions while the going is still good, and fingers crossed for the grandfathering.