I'd like to ask some very basic questions about shares

PedalCat

I like sandwiches
1. I thought a shares ISA was for dividends - if any - to be deposited into. I now read that shares per se can be "held" in an ISA. Which is it? How does this work? If shares were to be held in an ISA would that ISA typically be under the wing of a nominee account, or separate from?

Thanks in advance. There'll be more questions.
 

cisamcgu

Legendary Member
Location
Merseyside-ish
A stocks & shares ISA is a vehicle for holding shares, bonds, funds etc. outside of the normal tax regime - similar to the normal cash ISA.

You can have any dividends that the S&S ISA produces either automatically reinvested (either by choosing a fund/ETF that does that for you, or taking the dividend and manually investing it) or withdraw them.

They are held under your own name, the same as a cash ISA is in your name.

An annual limit of £20,000 applies
 
OP
PedalCat

PedalCat

I like sandwiches
A stocks & shares ISA is a vehicle for holding shares, bonds, funds etc. outside of the normal tax regime - similar to the normal cash ISA.

You can have any dividends that the S&S ISA produces either automatically reinvested (either by choosing a fund/ETF that does that for you, or taking the dividend and manually investing it) or withdraw them.

They are held under your own name, the same as a cash ISA is in your name.

An annual limit of £20,000 applies
Thanks. Money is deposited into an account. How do shares end up in an account? Does the £20,000 limit refer to the value of the shares or the dividends that are the fruits of the shares?
 

PK99

Legendary Member
Location
SW19
A stocks & shares ISA is a vehicle for holding shares, bonds, funds etc. outside of the normal tax regime - similar to the normal cash ISA.

You can have any dividends that the S&S ISA produces either automatically reinvested (either by choosing a fund/ETF that does that for you, or taking the dividend and manually investing it) or withdraw them.

They are held under your own name, the same as a cash ISA is in your name.

An annual limit of £20,000 applies
One point of clarification, I you take the dividend from the ISA shares and reinvest them, they form part of this year's 20k limit. If the dividends remain as cash within the managed ISA wrapper they do not and the whole 20k is available for new .investments
 

cisamcgu

Legendary Member
Location
Merseyside-ish
Thanks. Money is deposited into an account. How do shares end up in an account? Does the £20,000 limit refer to the value of the shares or the dividends that are the fruits of the shares?
You elect to buy whatever shares, ITs, funds, bonds, etc.. that you wish with the money - you make the choice.

As PK99 said, the £20,000 pa limit is for new money, if the value of the shares/funds goes up - then that doesn't matter - equally, if they go down that doesn't allow you to add more :smile:
 
OP
PedalCat

PedalCat

I like sandwiches
You elect to buy whatever shares, ITs, funds, bonds, etc.. that you wish with the money - you make the choice.

As PK99 said, the £20,000 pa limit is for new money, if the value of the shares/funds goes up - then that doesn't matter - equally, if they go down that doesn't allow you to add more :smile:
Thanks. What about existing shares that are not yet under a platform's nominee or trading account, ie owned by an individual in the form of a shares certificate? Is it simply a case of registering a shares ISA account with the company so they can issue dividends into said account?
 

PK99

Legendary Member
Location
SW19
Thanks. What about existing shares that are not yet under a platform's nominee or trading account, ie owned by an individual in the form of a shares certificate? Is it simply a case of registering a shares ISA account with the company so they can issue dividends into said account?
IANAFE, but as I recall it.

It is not possible to transfer shares into an ISA (apart from eg when exiting a maturing share save scheme).*
We had a pot of shares under management and each year our broker guy sold shares and put the proceeds into our ISA pot (termed Bed & ISA)

I don't know how platforms work - we have a broker guy who does all the juggling.

I suspect that dribbling dividends into an ISA would be possible, but likely to be fees-inefficient.

EDIT
* The issue being it is necessary to crystallise any capital gains liability outside the ISA before moving cash into the ISA where it becomes CGT free.
 
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cisamcgu

Legendary Member
Location
Merseyside-ish
In theory you can simply add shares, but I douby any online platform will do it (I know HL don't at the moment even for their normal [non-ISA] fund account)
 

cisamcgu

Legendary Member
Location
Merseyside-ish
@PedalCat - you seem to be very focussed on dividends, if you, perhaps, explained more about what you want, it might be easier to see if anyone can help ?
 

SkipdiverJohn

Veteran
Location
London
1. I thought a shares ISA was for dividends - if any - to be deposited into. I now read that shares per se can be "held" in an ISA.
An ISA is simply a legal tax avoidance vehicle, and you can keep any permitted form of asset inside one.
You could set up an ISA and pay dividends on shares outside an ISA into it, but it is not a sensible way to do it. If you want to take maximum advantage of the tax regime, then you need to deposit a cash sum up to the £20k annual limit into a shares ISA, then buy shares with the deposited cash via the ISA provider, then reinvest the dividend income back into more shares - or hold it as cash in the ISA short term if you feel that share prices may soon fall and give you better value by not immediately reinvesting in shares.
There are various ways you can operate an ISA depending how interested you are in self-managing it and how much time you have. Simplest is you invest in some sort of index tracking fund, reinvest the income and forget about it. You'll broadly track the performance of the whole market, but you won't beat it significantly.
The other extreme is you select and purchase entirely your own mix of shares, and you don't automatically reinvest the dividends but hold them as cash and choose yourself what to buy and when. You might also trade shares in the hope of making profits on price volatility. The more actively you participate the more return you can potentially make, but you can also screw up more than the overall market if you get it wrong.
 

iluvmybike

Über Member
When you pay into an ISA you have already paid tax on it so when you come to get the money out it is then tax free. For Stocks & Shares ISA you are probably best using a fundmanager to invest your funds unless you are fairly 'expert'. They will take an annual commission to do so for you but it isn't a huge cost and well worth your while. A good manager will set up your fund to make it easy to switch from one fund to another - you need to be able to do this as some funds over a given period will not perform as well as others. Seek out a manager who will actively manage your portfolio to get you the best return. With Stocks & Shares ISAs, unlike cash ISAs your investment can go up AND down - as per the stock market. However the returns are substantially better. Be advised to go into S&S ISAs for a long term - short -term and go for a broad spread across the globe and do not rely on putting them all in a single place. Some funds are higher risk than others - yuo will get a better return but they may be more volatile. Medium risk finds smooth that risk out a bit more. The only no risdk funds are of course cash ones but inflation erodes badly there and you get very poor returns. Again a good manager will advise on the best spread for your investment. Don't react to the expected dips in the markets by deciding to sell off - yuo will end up losing money. Ride the bumps and it will recover. I have been investing for 35 years now and gone through various crises and held my nerve and it has proved worthwhile indeed.
 

shep

Über Member
Location
Wolverhampton
Can't you use them to put the proceeds from a 'share save ' scheme as well to offset capital gains tax?

I had one years ago which did quite well so on top of your personal allowance you could give your wife some and also use your annual ISA limit as well.
 

SkipdiverJohn

Veteran
Location
London
Can't you use them to put the proceeds from a 'share save ' scheme as well to offset capital gains tax?
You certainly used to be able to do this, because I've done it myself a few years ago. From memory, there was quite a tight timeline in which you had to transfer matured sharesave shares into an ISA. The annual ISA limit applied. You had to transfer the shares directly, IIRC, not sell them on the market then reinvest the proceeds - as simply selling the shares can trigger a CGT liability if the annual CGT allowance is exceeded.
What I did is transfer the maximum amount of shares up to the annual ISA allowance, then refrained from flogging the rest in one chunk. If you are going to sell tranches of shares at a profit, it's best to do one before the end of the current tax year, then sell more once you are in the new tax year. That way you get two lots of annual CGT allowance to play with..
 
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