Reply to: ISA's

[expat]

ISA's? Who is ISA?

a 10m-year-old mammal.

[Bagpuss]

ISA's? Who is ISA?

[expat]

Some more for for you expat:

* Can I use mark to model valuation on my ISA?

* If I stress test it using a 40% haircut and it fails, do I get a bailout?

On the first, I'll have to get back to you.
or not, more likely
On the second, no way. Unless you know something I don't?
and I don't think so

[bobhope]

Some more for for you expat:

* Can I use mark to model valuation on my ISA?

* If I stress test it using a 40% haircut and it fails, do I get a bailout?

[Doggy Styles]

OK, I should have said that money in an ISa is free of all tax as long as you keep it in the ISA, and at the thime when you take it out of the ISA.

So: put in £7000, it becomes £21000, still no tax due. Take £21000 out of ISA, still no tax due, because the gain that is now being cashed in happened inside an ISA.

Put £21000 in Building Society, get 1% interest = £210. Normal income tax due on £210, because the gain did not happen inside an ISA.

It's not clear from this thread, but actually Hector does grab some tax from your ISA - everyone pays basic-rate tax on dividends accrued within it.

[Cheshire Cat]

I have this with Barclays Stockbrokers. Very easy to trade online.

I bought HBOS and RBS a couple of years ago in my ISA: now worth 90% less

I wonder if I can offset these ISA losses against future gains made outside of an ISA?

Maybe now is the time to buy HBOS and RBS stocks then?
If they recover to last years prices at some point in the next 5 years, you'll make 1000% return.
It's a big "if".

[ChimpMaster]

Whilst we're here, can anybody recommend a self-trade ISA (if such a thing exists)?

I'd like to stick £5k in an ISA wrapper, but buy and sell shares myself within that wrapper "tax-free". It that possible?

I have this with Barclays Stockbrokers. Very easy to trade online.

I bought HBOS and RBS a couple of years ago in my ISA: now worth 90% less

I wonder if I can offset these ISA losses against future gains made outside of an ISA?

[Cheshire Cat]

I don't have much experience with ISAs (as you can probably tell) but there are "self select" ISAs out there. You can start here:
http://www.fool.co.uk/isas/self-select-isas.aspx

[Moscow Mule]

Whilst we're here, can anybody recommend a self-trade ISA (if such a thing exists)?

I'd like to stick £5k in an ISA wrapper, but buy and sell shares myself within that wrapper "tax-free". It that possible?

[expat]

Thanks expat, that was the clarification I was after.
I keep reading that the gains are CGT and Higher rate income tax free "so long as the cash is within the ISA" and I was concerned that this was a way of saying that if you make gains within the ISA, as soon as you draw the money from the ISA, those gains are taxed, which would just undo the entire advantage of using an ISA together.
I guess the reason that this phrase is repeated so often is that some people might think that once they put £X into a ISA, they can withdraw it the next day or the next year and it is then exempt from any tax ever again, which is clearly stupid.

It's one of those concepts that is annoyingly hard to express, probably because once you grasp it, it is not easy to guess what is not understood. If you see what I mean!

An ISA is usually called a wrapper, but I prefer to think of it as a ring-fenced area of invisibility.

Hector does not concern himself in any way with money that is inside the safe area. He just doesn't see it.

He also doesn't concern himself in any way with money as it comes out of the safe area. He doesn't see it coming out; later, once it is outside the safe area and back in your normal bank account, it is just ordinary money again.

He does see money going in, but he limits his concern to making sure that no more than the annual limit goes in every year. It's like a £7200 turnstile on the entrance (and a free one-way door on the exit).

[Cheshire Cat]

OK, I should have said that money in an ISa is free of all tax as long as you keep it in the ISA, and at the thime when you take it out of the ISA.

So: put in £7000, it becomes £21000, still no tax due. Take £21000 out of ISA, still no tax due, because the gain that is now being cashed in happened inside an ISA.

Put £21000 in Building Society, get 1% interest = £210. Normal income tax due on £210, because the gain did not happen inside an ISA.

Thanks expat, that was the clarification I was after.
I keep reading that the gains are CGT and Higher rate income tax free "so long as the cash is within the ISA" and I was concerned that this was a way of saying that if you make gains within the ISA, as soon as you draw the money from the ISA, those gains are taxed, which would just undo the entire advantage of using an ISA together.
I guess the reason that this phrase is repeated so often is that some people might think that once they put £X into a ISA, they can withdraw it the next day or the next year and it is then exempt from any tax ever again, which is clearly stupid.

[Gonzo]

I know this isn't a financial advice forum, but how do ISA's work? I've got a hell of a lot of shares and I'm just trying to work out if it's worth my while wrapping them in an ISA.

There are rules about the types of shares that qualify to be put in an ISA.

Unfortunately, you will not be able to put the shares of your Ltd Company into an ISA to avoid personal tax on the dividends.

[DieScum]

Yeah but how does it work if you put in £5000? This is too complicated!

[expat]

So, with reference to my example (Bob puts £7000 into a shares ISA and triples his money in 2 months, so sells the shares) what tax is due?

OK, I should have said that money in an ISa is free of all tax as long as you keep it in the ISA, and at the thime when you take it out of the ISA.

So: put in £7000, it becomes £21000, still no tax due. Take £21000 out of ISA, still no tax due, because the gain that is now being cashed in happened inside an ISA.

Put £21000 in Building Society, get 1% interest = £210. Normal income tax due on £210, because the gain did not happen inside an ISA.

[DieScum]

40 grand at 21 with 7k cash in the bank? What does Bob do?