Stocks and shares ISAs vs General Investment Stocks and shares account

[leavesrfalling]

Hello, hoping someone can give me a simple explanation and some advice as I don't fully understand ISA's...

I do have a stocks and shares ISA through the MoneyBox app. I put money in each week and have about £18,500 in there. I know that I can save up to £20k tax free.

What happens once I reach £20K: can I continue to put money in (but the excess will be taxed)?

Or should I freeze that and open a general investment stocks and shares ISA? I assume that is more of a regular account and will be subject to tax.

Or can I continue paying into both?

Any advice welcome! Thank you

You can pay in £20k each tax year, so if you’ve put it all in in one year you just wait until the next 6 April to put more in.

Thank you!

If you have more to invest you can put into a GIA whatever you have over £20k, then 6 April transfer to the ISA.

@leavesrfalling You could consider switching your ISA to a lower cost platform. I believe Moneybox has an 0.45% annual fee which works out at over £80 on your current total. Over time that really adds up a lot.

I've been using Trading 212 which has no annual fee and no buying/selling fees either, so perfect for adding small amounts regularly. You can't pay into more than one stocks and shares ISA in the same tax year, but you can certainly transfer the whole amount to a different provider.

Alternatively they also offer a non-ISA investment account which might be a good idea to try with a small amount if you wanted to see how you liked it in comparison to Moneybox. Obviously doesn't have the tax advantages of an ISA so not what you'd want for your main investment.

If you were to sign up with my link we would each receive a free share worth £10 to £100. Probably the lower end of that range, but could be lucky. There are a lot of good online reviews too, worth having a look at those - it's UK based and regulated.

The lack of charges really does add up a lot over time, especially if you go with index funds with management fees of 0.1% or less.
Link or use code 16bjA3Ceso

@Lucanus how do trading 212 make their money?

@NotDonna I believe they make quite a bit from their CFD account option - essentially betting on upward/downward movements of share prices. I'd personally avoid getting involved in that unless you really know what you are doing. It's separate to the standard ISA or investment account.

For their regular investment accounts they make money by lending out shares. The profit from this is split 50:50 between T212 and the owner of the shares. Share lending isn't an option for ISAs though.

ISA allowance is £20k per year, so don't stop funding it, that's about £1600 a month. Everything after that into a general stocks and shares account. I use HL as I like the app. I made the mistake of trying to pick shares, just up a fund and leave it to those who know what they're doing 🤦🏽‍♀️

Read Meaningful Money handbook

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Stocks and Shares ISA:

A Stocks and Shares Individual Savings Account (ISA) is a tax-efficient way to invest in the stock market. In the UK, each individual can invest up to a certain limit annually (as you mentioned, £20,000) without paying capital gains tax on the profits earned. Once you reach this limit, you cannot contribute more to your Stocks and Shares ISA for that tax year.

If you have already maximized your ISA contribution and wish to continue investing, you have a few options:

Wait Until the Next Tax Year: Unused ISA allowance doesn't roll over to the next tax year, but your allowance resets, allowing you to contribute another £20,000 tax-free.

Consider a General Investment Account (GIA):

General Investment Stocks and Shares Account (GIA):

A General Investment Account (GIA) is a standard investment account without the tax advantages of an ISA. Here are some key differences and considerations:

Tax Implications: Unlike ISAs, gains within a GIA are subject to capital gains tax (CGT) if they exceed the annual CGT allowance (which is separate from the income tax allowance).

No Contribution Limits: There are no contribution limits in a GIA, and you can invest as much as you want. However, any gains may be subject to tax.

Flexibility: Unlike ISAs, where your money is typically invested in a range of funds or stocks, a GIA offers more flexibility in terms of investment choices and strategies.

Withdrawals: You can withdraw money from a GIA at any time without restrictions or penalties.

Considerations for Your Situation:

If you've already maximized your Stocks and Shares ISA and want to continue investing, opening a GIA can be a viable option. Here are a few things to consider:

Diversification: Having both a tax-advantaged ISA and a GIA can provide a diversified investment strategy. You can allocate assets based on their tax efficiency and your financial goals.

Tax Planning: Be mindful of your overall tax position. If you anticipate significant gains, the tax advantages of an ISA may outweigh the flexibility of a GIA.

Long-Term Goals: Consider your long-term investment goals. If you plan to invest for the long term, taking advantage of ISA allowances every year could lead to substantial tax savings over time.