Flexible ISA accounts
Discussion
Hypothetical question for discussion, education, information, bit of fun etc.
Critique the following scenario:
Dave has two flexible S&S ISA accounts, one for sensible long term growth and one for playing punts.
He's used his £20,000 ISA limit for this tax year.
His mate Barry knows a bloke who's uncle overheard a geezer down the boozer what knows a bit about them stock markets talking about investing in a company dealing in recycling cows into trees.
Dave fancies a punt.
He does a partial transfer of £40,000 from his long term ISA into his punting ISA.
Cowtrees stock triples in value, after a well known burger franchise buys them out to launch their new flat pack furniture range side company.
Dave now has £120,000 in his punting ISA.
He transfers the lot back into his long term ISA to save himself spending it all on toys.
Is this possible?
I know that it would all have to take place within the same financial year.
Can partial transfers between flexible ISAs be done by withdrawing cash from one and paying cash into the other, or does it have to be via partial transfer?
At what point could the ISA tax wrapper advantages (CGT and IT) be lost?
I suspect that may happen if you withdraw to cash.
Critique the following scenario:
Dave has two flexible S&S ISA accounts, one for sensible long term growth and one for playing punts.
He's used his £20,000 ISA limit for this tax year.
His mate Barry knows a bloke who's uncle overheard a geezer down the boozer what knows a bit about them stock markets talking about investing in a company dealing in recycling cows into trees.
Dave fancies a punt.
He does a partial transfer of £40,000 from his long term ISA into his punting ISA.
Cowtrees stock triples in value, after a well known burger franchise buys them out to launch their new flat pack furniture range side company.
Dave now has £120,000 in his punting ISA.
He transfers the lot back into his long term ISA to save himself spending it all on toys.
Is this possible?
I know that it would all have to take place within the same financial year.
Can partial transfers between flexible ISAs be done by withdrawing cash from one and paying cash into the other, or does it have to be via partial transfer?
At what point could the ISA tax wrapper advantages (CGT and IT) be lost?
I suspect that may happen if you withdraw to cash.
.GliderRider said:
I don't understand what the benefit is of having the two ISAs; why not just do it all in the one?
I don't do the multiple ISAs running different strategies thing, but holding two ISAs mitigates a risk of losing access(hopefully not actual money) to your money if a platform runs into difficulties (IT or otherwise).You might also run two to take advantage of different fee structures - cheap trades but a % fee on an ISA you're contributing to, and periodically do an ISA transfer to a platform that charges for trades but has no % fee
Surely if it is a flexible ISA you can only put back what you had taken out in that year (plus that years ISA value if not used)
If you could put in any returns made out with the ISA there would be zero control and everyone could / would put more in each year over £20k limit.
I would confidently say as a none Financial Guru you can’t return more than you had taken out in that year. (Apart from that years allowance if not used)
If you could put in any returns made out with the ISA there would be zero control and everyone could / would put more in each year over £20k limit.
I would confidently say as a none Financial Guru you can’t return more than you had taken out in that year. (Apart from that years allowance if not used)
Dave says;
One ISA is funds only, so he can't invest in individual stocks within that ISA.
The other ISA is stocks & shares plus funds - that's his playtime ISA.
Keeping them separate reduces the risk of him punting with money that he may need for other things in the future.
I've looked into this a bit more and it would seem (though I may be wrong) that you can withdraw cash from a flexible ISA and then pay it back in as cash, so no need for partial transfers between ISA providers.
You can't pay in more than you originally took out, including up to your annual contribution of £20,000.
So if you hadn't used your annual contribution you could put back £20,000 more than you took out in one tax year.
I think ISAs are great.
Dave likes them too.
Edited to add that the only drawback with the 2 ISA strategy would appear to be that the profit made in the punting ISA (£80,000 in this scenario) can't be invested directly in the long term ISA and would have to stay in the punting ISA.
One ISA is funds only, so he can't invest in individual stocks within that ISA.
The other ISA is stocks & shares plus funds - that's his playtime ISA.
Keeping them separate reduces the risk of him punting with money that he may need for other things in the future.
I've looked into this a bit more and it would seem (though I may be wrong) that you can withdraw cash from a flexible ISA and then pay it back in as cash, so no need for partial transfers between ISA providers.
You can't pay in more than you originally took out, including up to your annual contribution of £20,000.
So if you hadn't used your annual contribution you could put back £20,000 more than you took out in one tax year.
I think ISAs are great.
Dave likes them too.
Edited to add that the only drawback with the 2 ISA strategy would appear to be that the profit made in the punting ISA (£80,000 in this scenario) can't be invested directly in the long term ISA and would have to stay in the punting ISA.
Edited by rfisher on Saturday 30th October 13:47
Prawo Jazdy said:
I’ve got my ISA with Nutmeg. Why have I been foolish? I’m not disagreeing, I just want to understand.
In the context of the original question, Nutmeg doesn't give you the ability to invest in single companies, which you'd need to do to take advantage of the overheard knowledge.
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