Parking Money In A S&S ISA

[DSLiverpool]

Anyone cashed in a portfolio but left the money in a S&S ISA ? not forever, but I was thinking once I get to my target return and make my own decision on market fall back I would want to temporarily be "out" of shares but keep the cash qualified to get back in again when I feel the market has value.

[Ginge R]

DS,

If you want to park in something with as low volatility as cash, ask about investment cash funds. And following the budget, you can now move investment ISA money into a cash ISA as well as vice versa. This takes effect from July.

[DSLiverpool]

Hi Ginge
Its temporary, I was thinking of cashing in now and re-entering when the market offers value I have my humble opinion on where prices are going and I want to be out for a bit then in on better value terms later in the year.

[vescaegg]

I suppose you could do. Not sure if there are any rules regarding it as wouldn't that mean you are treating it as a cash isa effectively?

[megaphone]

Depends who provides your ISA. Most will allow you to hold cash in the ISA 'wrapper', you just won't get any interest on it. As said this will change for the better in July.

[Ginge R]

DSLiverpool said:

Hi Ginge
Its temporary, I was thinking of cashing in now and re-entering when the market offers value I have my humble opinion on where prices are going and I want to be out for a bit then in on better value terms later in the year.

Take a view on an investment fund like this.

http://www.trustnet.com/Factsheets/Factsheet.aspx?...

[Jockman]

vescaegg said:

I suppose you could do. Not sure if there are any rules regarding it as wouldn't that mean you are treating it as a cash isa effectively?

Good point. I was under the impression there were rules against doing this. I believed cash could only be held in an S&S Isa for so long otherwise it would contravene current rules.

Can anyone confirm this

[PetrolTed]

I've got a cash balance in my s&s ISA from the sale of shares that I've decided to get out of. I don't get interest on it and I'm not aware of any reason why it can't just sit there indefinitely if I so chose.

[Revisitph]

I have sharedealing accounts with my bank, one standard, one ISA. Any uninvested cash (whether put in by me or paid back into the account as dividends from shares, or proceeds of sales of shares held in the ISA) earns a paltry rate of interest which is taxed at 20%. The key features say about cash in the account:

"Surplus cash may be held in an ISA pending a suitable investment opportunity. You will receive interest on the money that is being held for investment purposes. However, for cash held in a Stocks and Shares ISA there will be a 20% charge applied by HM Revenue and Customs on this earned interest. HM Revenue and Customs regulations state that we will write to notify you of any uninvested cash held within the ISA."

The length of time for which you can hold uninvested cash before they "write to you" (hassle you to invest it or take it out) is not stated, but the interest rate is not designed to be competitive against cash ISAs and it is taxable, albeit at the lowest rate, so there isn't an incentive to abuse the S&S ISA by using it as a de facto cash ISA - and of course when the budget changes come in the distinction between the two will disappear. It will be interesting to see if the interest rates on the cash element improve to reflect this.

ETA - I've just checked the interest rate on uninvested cash - it is 0.1% (0.08% net).

Edited by Revisitph on Friday 28th March 23:34

Edited by Revisitph on Saturday 29th March 08:40

[Sideways Rich]

Hi Al, a friend wants to use up this years allowance for s an s ISA before Mondays deadline.

Question, if they haven't yet chosen a fund or stock they want to buy, can they fund the S and S ISA with the full £11,280 and then take their time in choosing which funds/stocks they want to buy?

Or do you have to buy stocks/funds as soon as you open the account?

[Ginge R]

Yes, but be careful of potential fund switch costs - if you can do it right now all the better. A quick and dirty approach is to max out a cash ISA for the smaller amount and then transfer into Investment ISA.

[jfbrin]

Sideways Rich said:

Hi Al, a friend wants to use up this years allowance for s an s ISA before Mondays deadline.

Question, if they haven't yet chosen a fund or stock they want to buy, can they fund the S and S ISA with the full £11,280 and then take their time in choosing which funds/stocks they want to buy?

Or do you have to buy stocks/funds as soon as you open the account?

You do not have to invest your stocks and shares ISA upon subscription. The important thing is to get your cash into the ISA before the tax year end. Then you can take your time to invest.
Whilst I believe there is no specific number of days laid down by HMRC re how long you can hold cash in a S&S ISA, anything over 6 months is pushing it. The legislation largely leaves this decision to the ISA manager who is obliged to inform their client of the fact that S&S ISA cash is for investing in shares. This is not just a ploy or push by the plan manager to get you to invest. It would be so much easier if a specific time limit was applicable but there isn't as far as I know.
However, this all changes in July when the £15,000 allowance comes in. Then, I expect the "NISA" will be basically a combination of a cash and stocks & shares ISA thus removing any investment deadlines. However that is just an assumption at this stage.