Actively trading ISA question

[isee]

Is it allowed?
Is it still tax free if you bought for 15k but closed out 20k say in a year?
Can you then buy 20k worth of shares again all within the same ISA allowance year?
Is there a limit?

Googling seems to only yield promotional info each provider promoting their share ISA, but not concrete info about investing your yearly allowance, but what happens to it if your active trading increases the total value invested within the same tax year with each round trip.

Thanks a lot in advance

[toohangry]

The limit is on what you pay in, not on what then happens to it once it's in.

[bogie]

there are people out there with million pound plus ISA pots, and its tax free..you just have to put the money in each year, and grow it by buying the right shares ...easy eh ?

[isee]

toohangry said:

The limit is on what you pay in, not on what then happens to it once it's in.

It makes sense and I suspected as such, but had to double check as I am a bit late to the game.

Thanks for your answer

[DonkeyApple]

Your issue is not the wrapper but the stamp duty.

A charge of 50bp per round trip in tax will catagorically negate any returns on an actively traded portfolio.

[isee]

DonkeyApple said:

Your issue is not the wrapper but the stamp duty.

A charge of 50bp per round trip in tax will catagorically negate any returns on an actively traded portfolio.

Could you elaborate on that please? I will get charged half a percent on every £1 I make or on the notional value of the trade or something? Is that something I will need to declare in self-assessment or is it charged at source?

If I understood you right, then it doesn't seem like a show-sopper, the broker already charges me with their spread, so all I get is a wider spread essentially right? I am not asking because I plan on day trading or arbing, but some growth stocks I selected happen to have come in earlier than expected and I don't want to hold them in hope for a higher return and would rather change my selection.

[DonkeyApple]

isee said:

DonkeyApple said:

Your issue is not the wrapper but the stamp duty.

A charge of 50bp per round trip in tax will catagorically negate any returns on an actively traded portfolio.

Could you elaborate on that please? I will get charged half a percent on every £1 I make or on the notional value of the trade or something? Is that something I will need to declare in self-assessment or is it charged at source?

If I understood you right, then it doesn't seem like a show-sopper, the broker already charges me with their spread, so all I get is a wider spread essentially right? I am not asking because I plan on day trading or arbing, but some growth stocks I selected happen to have come in earlier than expected and I don't want to hold them in hope for a higher return and would rather change my selection.

Hi,

The market charges you the bid/offer spread, the broker just charges the commission as this is physical stock trading not OTCs like spread bets or CFDs.

At the same time, on-exchange transactions carried out as Agent attract a Govt tax of 0.5% of the value of the transaction. The broker levies this on your behalf.

If you aren't actively trading then it's an irrelevance but once people get into short term trading it erodes all performance unless the trader is taking abnormal risks (which they usually are) in which case they will just lose the entire fund to the market.

[DonkeyApple]

RR the other bits in your post, gains don't factor into any allowance calculations. Allowancrs are just relating to new cash introduced to the wrapper. And there are no restrictions on trade activity although as all brokers know that day trading physical equities cannot deliver a return for the client then they have a regulatory obligation under KYC and TCF to prevent a client from behaving in such a way.

[isee]

DonkeyApple said:

Hi,

The market charges you the bid/offer spread, the broker just charges the commission as this is physical stock trading not OTCs like spread bets or CFDs.

At the same time, on-exchange transactions carried out as Agent attract a Govt tax of 0.5% of the value of the transaction. The broker levies this on your behalf.

If you aren't actively trading then it's an irrelevance but once people get into short term trading it erodes all performance unless the trader is taking abnormal risks (which they usually are) in which case they will just lose the entire fund to the market.

Ah sorry, assumed the agent was widening the spread for the retail customer but good to know that the trading fees is the only charge.
So is this 0.5% expense known up front and not something I am going to be charged with later or need to keep track of, provided that I have accounted for all my costs disclosed by the broker at the time of doing each leg of the roundtrip and I still come out net positive, I have made a profit right? there is no hidden or delayed charge or invoice that I will receive after I have closed the position?

I am totally on board with not overtrading, but like I said, something has risen above target and much quicker than expected so just wanted to know where I stood before I closed out something that looks positive but actually sin't after costs.

[DonkeyApple]

isee said:

DonkeyApple said:

Hi,

The market charges you the bid/offer spread, the broker just charges the commission as this is physical stock trading not OTCs like spread bets or CFDs.

At the same time, on-exchange transactions carried out as Agent attract a Govt tax of 0.5% of the value of the transaction. The broker levies this on your behalf.

If you aren't actively trading then it's an irrelevance but once people get into short term trading it erodes all performance unless the trader is taking abnormal risks (which they usually are) in which case they will just lose the entire fund to the market.

Ah sorry, assumed the agent was widening the spread for the retail customer but good to know that the trading fees is the only charge.
So is this 0.5% expense known up front and not something I am going to be charged with later or need to keep track of, provided that I have accounted for all my costs disclosed by the broker at the time of doing each leg of the roundtrip and I still come out net positive, I have made a profit right? there is no hidden or delayed charge or invoice that I will receive after I have closed the position?

I am totally on board with not overtrading, but like I said, something has risen above target and much quicker than expected so just wanted to know where I stood before I closed out something that looks positive but actually sin't after costs.

You will have already paid the tax when you opened the position. It will be detailed in your contract note along with the commission etc.

Have a quick read here for details: https://www.gov.uk/tax-buy-shares/overview

So, in short, you've paid it and what you are looking to do is not what we would think of as active trading so nothing I've said should be of concern to you.

If you want to book the profit then you should do so. Congrats on a nice trade.

[isee]

DonkeyApple said:

You will have already paid the tax when you opened the position. It will be detailed in your contract note along with the commission etc.

Have a quick read here for details: https://www.gov.uk/tax-buy-shares/overview

So, in short, you've paid it and what you are looking to do is not what we would think of as active trading so nothing I've said should be of concern to you.

If you want to book the profit then you should do so. Congrats on a nice trade.

Thanks for the patient answers, you've been of massive help.

on a slightly different note, any thoughts on UKOG and SOLO?
I don't know about your outfit but 99% and 100% of IG's clients are long of these stocks respectively. time to short?

[DonkeyApple]

isee said:

Thanks for the patient answers, you've been of massive help.

on a slightly different note, any thoughts on UKOG and SOLO?
I don't know about your outfit but 99% and 100% of IG's clients are long of these stocks respectively. time to short?

Happy to help if I can.

I'm not the right person to ask about small caps. I despise them and I don't make a market it in them leverage on high risk, illiquid equities is madness in my book.

It's also st business as you have to hedge it due to the risk and there is no turnover so no revenue and the final nail in the coffin is that you carry enormous client default risk. IG are happy to take the business because firstly they have a very large balance sheet so it doesn't impact their operation and secondly they are happy to take on client default risk because they are happy to take a customer's house and everything he has and will chase to the ends of the earth to do so.

I sat at IG for a decade watching over quarter of a million retail betters lose trading penny shares. And I know most of the horrific scummers who feltch an existence milking punters of penny shares.

I enjoy reading posts where people have made a fantastic turn out of a penny share but sadly I know the true reality which is that that market is a slaughter ground for innocents.