Share ISAs

Discussion in 'Finance, Property, Law' started by Pork_Pie, Oct 1, 2006.

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  1. I'm considering starting a share ISA (self select) later this year. (I've already used my mini cash ISA allowance.)

    Are there any particular problems I need to be aware of?

    I presume that the various admin charges are, for the most part, not a big deal IF you are in for the long term, but if you might need access to your money soon after investing, then share ISAs (at least self select ones) might not be for you.

    Do persons investing via ISAs have usual voting rights? Do you get access to the discounts/gifts that 'normal' shareholders do. (Not that the latter issue would be a major consideration :D )

    I found some details on this site, but the reference to standard rate tax payers not paying tax on dividends led me to doubt its credibility.


    Edited for wine influenced spelling.
  2. BiscuitsAB

    BiscuitsAB LE Moderator

    my advice go to

    and find an IFA then get them to explain the benefits of a platform arrangement. My personal choice is Co-funds.
  3. I assume that you are thinking of opening another Mini ISA for the shares and not a Maxi ISA? You can have two Mini ISAs in the same tax year, but you can not hold a Maxi ISA with any other form of ISA in the same tax year.

    You may know this already, but I wouldn't want you to get in trouble with HMRC!
  4. The quote is correct; the advantage of an ISA is that it is Tax Free, in terms of Interest and Capital Gains. Notwithstanding this you do not recieve a Tax Credit on dividends but you do still get a Tax Credit on interest earned from Bonds & Gilts.

    Points to consider:

    1. Look at the TER (Total Expense Ratio) for each fund. A basic Index Tracker should only be charging 1% or less.

    2. Be careful when considering the Fund Supermarkets, they do offer discounts but you may find that they push funds not provide by themselves to increase there profits.

    3. Last time I looked both M&G and Fidelity were offering low cost Tracker Funds without initial charges (TER of 0.74% and 0.54% respectively). They also have the advantage that they offer a range of funds to purchase inside your ISA wrapper.

    4. Be careful if you are planning to buy and sell funds regularly as the Bid/Sell costs will reduce your returns.

    5. Monthly contributions should be considered to iron out some of the fluctuation in the markets (as opposed to investing a Lump Sum once or twice a year).

    6. Generally only invest in the shares, if you have sufficient liquid cash in Savings to meet most short term needs. The value of investing in shares is the longer term growth and the re-investment of dividends. I have had an ISA for 6 years and only know and I'm seeing the value dividend on top of growth and continued contributions.

    7. Don't look at your portfolio too often, review it every few months.

    8. Depending on what you are saving the money for consider investing in SIPP/Stakeholder Pension. (Even if you are in HM Forces Scheme) These are also tax free and give you Tax relief $22 for every $78 invested. The value of the fund is not considered if you ever need to fall back on Social Security whereas ISAs are.

    9. Research is important, but also consider your personal circumstances now and in the future. This should affect what choice you make or what an IFA will advise. Before getting an IFA or investing consider your long term goals and what your future financial situation will be...i.e. Mortgages, Marriage, Divorce, Kids, leaving HM forces etc. The better you can articulate the long term plans, the better your financial planning will be.

    10. Good luck

    note: $ = GBP (I don't have a UK keyboard)
  5. As I understand it, shares held in an ISA are held in a nominee account, so the ISA holder does not have voting rights etc. This should not worry you unduly. Similarly, you would not be entitled to shareholder discounts/perks.
  6. Thanks for the replies.