Discussion
It has likely got to the point where I need to open one of these, unless I wish to hold more cash than I want to - (I have considered ISA, Pension, mortgage rate too low to bother overpaying, etc).
I think I have my head right with regards to most of my existing tax situations, but this one is throwing me somewhat - I understand that each individual gets an allowance on dividend income, a CGT allowance. Am I right in thinking that it would make most sense to open a joint GIA account in order to most easily give me the largest amount of dividend allowance and of course doubles the CGT allowance to 25k or so? Is CGT due on profits when crystallised only or just on the years gain at that point in time?
My biggest concern with all this is how much of a faff it all becomes when reporting self assessment, I have had a look on Vanguard and II for example but I can't easily see where they talk about how they report dividend income etc?
I have enjoyed learning about this, while I could pay someone, I rather favour getting my head round it myself first, so if there is a better idiots guide than what I've found out there which doesn't (to me) make the above super clear then I'd love to hear it!
I think I have my head right with regards to most of my existing tax situations, but this one is throwing me somewhat - I understand that each individual gets an allowance on dividend income, a CGT allowance. Am I right in thinking that it would make most sense to open a joint GIA account in order to most easily give me the largest amount of dividend allowance and of course doubles the CGT allowance to 25k or so? Is CGT due on profits when crystallised only or just on the years gain at that point in time?
My biggest concern with all this is how much of a faff it all becomes when reporting self assessment, I have had a look on Vanguard and II for example but I can't easily see where they talk about how they report dividend income etc?
I have enjoyed learning about this, while I could pay someone, I rather favour getting my head round it myself first, so if there is a better idiots guide than what I've found out there which doesn't (to me) make the above super clear then I'd love to hear it!
I honestly don't know why people complicate their tax affairs with a GIA when for the majority a Stocks and Shares ISA account is so much less hassle even aside from saving tax.
You can shelter £40k pa in a SIPP/Pension, and £20k pa in an ISA. So you only really need a GIA if you are saving 1) in excess of those per year or 2) you have come into a large windfall, perhaps from a property sale, business sale or inheritance that you cannot place into an ISA in one go.
In those cases I guess it makes sense, and even with the repeated slashing of the dividend allowance, unwrapped dividends aren't taxed too horrifically as long as your total personal income is under £50k pa in total.
It also made sense to use a GIA, say more for growth stocks/funds, when the CGT allowance was more generous, but Hunt has really hacked back on that for the future.
But I'd say go for separate Stocks and Shares ISA accounts for yourself and spouse, even if you are funding both.
You can shelter £40k pa in a SIPP/Pension, and £20k pa in an ISA. So you only really need a GIA if you are saving 1) in excess of those per year or 2) you have come into a large windfall, perhaps from a property sale, business sale or inheritance that you cannot place into an ISA in one go.
In those cases I guess it makes sense, and even with the repeated slashing of the dividend allowance, unwrapped dividends aren't taxed too horrifically as long as your total personal income is under £50k pa in total.
It also made sense to use a GIA, say more for growth stocks/funds, when the CGT allowance was more generous, but Hunt has really hacked back on that for the future.
But I'd say go for separate Stocks and Shares ISA accounts for yourself and spouse, even if you are funding both.
Edited by WayOutWest on Thursday 1st December 12:30
WayOutWest said:
I honestly don't know why people complicate their tax affairs with a GIA when for the majority a Stocks and Shares ISA account is so much less hassle even aside from saving tax.
You can shelter £40k pa in a SIPP/Pension, and £20k pa in an ISA. So you only really need a GIA if you are saving 1) in excess of those per year or 2) you have come into a large windfall, perhaps from a property sale, business sale or inheritance that you cannot place into an ISA in one go.
In those cases I guess it makes sense, and even with the repeated slashing of the dividend allowance, unwrapped dividends aren't taxed too horrifically as long as your total personal income is under £50k pa in total.
It also made sense to use a GIA, say more for growth stocks/funds, when the CGT allowance was more generous, but Hunt has really hacked back on that for the future.
But I'd say go for separate Stocks and Shares ISA accounts for yourself and spouse, even if you are funding both.
Yes, I'm in bucket 1, hence the ask, also used my wife where relevant to your last point.You can shelter £40k pa in a SIPP/Pension, and £20k pa in an ISA. So you only really need a GIA if you are saving 1) in excess of those per year or 2) you have come into a large windfall, perhaps from a property sale, business sale or inheritance that you cannot place into an ISA in one go.
In those cases I guess it makes sense, and even with the repeated slashing of the dividend allowance, unwrapped dividends aren't taxed too horrifically as long as your total personal income is under £50k pa in total.
It also made sense to use a GIA, say more for growth stocks/funds, when the CGT allowance was more generous, but Hunt has really hacked back on that for the future.
But I'd say go for separate Stocks and Shares ISA accounts for yourself and spouse, even if you are funding both.
Edited by WayOutWest on Thursday 1st December 12:30
Maybe fill both self and spouses S&S ISAs first, and then put any excess in a GIA. I think tax reporting for a joint GIA is likely to be a pain - maybe have a GIA each unless there is some other advantage to going joint, such as being able to trade on her/his behalf if your spouse is not investment savvy.
P.S. CGT only due on sells/disposal, when profits are crystallised.
I think unrealised capital gains would only be taxed under a crazy socialist government.
P.S. CGT only due on sells/disposal, when profits are crystallised.
I think unrealised capital gains would only be taxed under a crazy socialist government.
Edited by WayOutWest on Thursday 1st December 12:52
okgo said:
My biggest concern with all this is how much of a faff it all becomes when reporting self assessment, I have had a look on Vanguard and II for example but I can't easily see where they talk about how they report dividend income etc?
Each year the platform (Vanguard, IM, Hargreaves Lansdown etc) will generate a Tax Certificate for you which will detail Dividends Received (which gets entered along with any other Dividends in your SA return) & any Capital Gains, both Realised & Retained. The Realised figure is the one you enter in the CG box & the Retained one is the notional gain you would make if you sold the stocks/funds in the GIA.The trick is, or has been until this Budget, to sell enough of your funds to realise a gain of just less than the CGT Allowance each year sometime in March. That way you crystallise the gain without paying tax on it. You can buy a different fund or stock if you leave the proceeds in the GIA. Rinse & repeat each year.
Mr Pointy said:
The trick is, or has been until this Budget, to sell enough of your funds to realise a gain of just less than the CGT Allowance each year sometime in March. That way you crystallise the gain without paying tax on it. You can buy a different fund or stock if you leave the proceeds in the GIA. Rinse & repeat each year.
Each time I'm lining up to 'crystallise my gain' there's been a global crisis and there isn't one... Mr Pointy said:
Each year the platform (Vanguard, IM, Hargreaves Lansdown etc) will generate a Tax Certificate for you which will detail Dividends Received (which gets entered along with any other Dividends in your SA return) & any Capital Gains, both Realised & Retained. The Realised figure is the one you enter in the CG box & the Retained one is the notional gain you would make if you sold the stocks/funds in the GIA.
The trick is, or has been until this Budget, to sell enough of your funds to realise a gain of just less than the CGT Allowance each year sometime in March. That way you crystallise the gain without paying tax on it. You can buy a different fund or stock if you leave the proceeds in the GIA. Rinse & repeat each year.
Thanks, that makes things slightly more logical re tax etc. The trick is, or has been until this Budget, to sell enough of your funds to realise a gain of just less than the CGT Allowance each year sometime in March. That way you crystallise the gain without paying tax on it. You can buy a different fund or stock if you leave the proceeds in the GIA. Rinse & repeat each year.
okgo said:
Revisiting this now as I need to action something.
I'd be interested to hear how those with a GIA are going to manage the CGT allowance changes?
There's nothing really to manage - we'll all just pay more tax on realised CGT gains. Filling up the ISA account is obviously an important stage. I'd be interested to hear how those with a GIA are going to manage the CGT allowance changes?
nickfrog said:
Sorry for the hijack but has anyone successfully managed to do a Bed and ISA away from a GIA with Vanguard ? Was it seamless and online ?
Surely this is just a sale of the holding with Vanguard and a purchase of an ISA elsewhere with the proceeds? Assuming I've read that right. Normally a Bed and ISA is with the same provider but it always means the sale in the GIA and repurchase of the fund(s) within the ISA and hence a potential capital gain/loss on the sale. So the question is how quickly can you realise the sale with Vanguard and then how quickly you can arrange the ISA with another provider and the second bit is very provider specific.
Enut said:
nickfrog said:
Sorry for the hijack but has anyone successfully managed to do a Bed and ISA away from a GIA with Vanguard ? Was it seamless and online ?
Surely this is just a sale of the holding with Vanguard and a purchase of an ISA elsewhere with the proceeds? Assuming I've read that right. Normally a Bed and ISA is with the same provider but it always means the sale in the GIA and repurchase of the fund(s) within the ISA and hence a potential capital gain/loss on the sale. So the question is how quickly can you realise the sale with Vanguard and then how quickly you can arrange the ISA with another provider and the second bit is very provider specific.
nickfrog said:
Enut said:
nickfrog said:
Sorry for the hijack but has anyone successfully managed to do a Bed and ISA away from a GIA with Vanguard ? Was it seamless and online ?
Surely this is just a sale of the holding with Vanguard and a purchase of an ISA elsewhere with the proceeds? Assuming I've read that right. Normally a Bed and ISA is with the same provider but it always means the sale in the GIA and repurchase of the fund(s) within the ISA and hence a potential capital gain/loss on the sale. So the question is how quickly can you realise the sale with Vanguard and then how quickly you can arrange the ISA with another provider and the second bit is very provider specific.
Been a few months, and I wondered whether I'm going mad/being thick or whether I'm right to be slightly confused (probably the former)..
This tax year I've been contributing to a new GIA (only in my name given its not likely in any event just yet to generate more than my capital gains allowance). The intention here is of course to be in market and be able to use gains made in this account to make a start on filling next years ISA allowances. However, it got me thinking that it is entirely likely there will be no gain over the year, or potentially a loss too. Based on this, is the advice to just keep filing the GIA until there is a gain, and use other money to fill the ISA allowances?
Like I said, lots of information out there about bed and ISA and why you'd do it, but it doesn't seem to answer my question of 'when you should/should not do it', or talk much to those people who can fund the ISA allowance without needing to touch the GIA (because we could add to it monthly from salary).
Like I said, probably a simple answer..but in my simplistic mind, currently the GIA is flat, had it been in bonds/bank account there would be a guarantee gain ready to make use of next april?
This tax year I've been contributing to a new GIA (only in my name given its not likely in any event just yet to generate more than my capital gains allowance). The intention here is of course to be in market and be able to use gains made in this account to make a start on filling next years ISA allowances. However, it got me thinking that it is entirely likely there will be no gain over the year, or potentially a loss too. Based on this, is the advice to just keep filing the GIA until there is a gain, and use other money to fill the ISA allowances?
Like I said, lots of information out there about bed and ISA and why you'd do it, but it doesn't seem to answer my question of 'when you should/should not do it', or talk much to those people who can fund the ISA allowance without needing to touch the GIA (because we could add to it monthly from salary).
Like I said, probably a simple answer..but in my simplistic mind, currently the GIA is flat, had it been in bonds/bank account there would be a guarantee gain ready to make use of next april?
I suppose I’m wondering for example now - there’s something like £20k in my GIA - why didn’t I just put it in bonds or a high interest account and know I’ll have made a gain before I chuck it into my ISA on day 1 of new tax year?
I guess I can see the logic a little more once the GIA exceeds £40k (wife and I allowance for ISA), which probably will be the case by April.
Think I’m struggling conceptually now there’s a guaranteed way of making decent gains in <12 months without having to chance the markets.
I guess I can see the logic a little more once the GIA exceeds £40k (wife and I allowance for ISA), which probably will be the case by April.
Think I’m struggling conceptually now there’s a guaranteed way of making decent gains in <12 months without having to chance the markets.
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