Reply To: ISAs, SIPPs and falling tax free allowances

[Stephen Bland]

As you say Nicola, I am not permitted to give personal financial advice so that does restrict substantially my response to your points.

As a generality, I always suggest that HYPers use ISAs as far as possible for their portfolios. And as another generality, I much prefer them to SIPPs because the latter are overloaded with restrictions of which the rules change often and I see little or no attraction in the purported tax advantages compared with ISAs. But having said that, individual circumstances vary so much that each investor has to make their own decision.

On your other point, assuming ISAs are of benefit to you personally upon which I won’t comment, I think it preferable to move HYP shares held in a direct account into the ISA. I have done this myself, repeatedly. That does constitute a sale and repurchase in the ISA because you can’t make a direct transfer, but it’s the only way to do it so I don’t consider that such a transaction breaches my “never sell” rule. This will involve some costs but in my view the attractions of ISAs are such that it is worth it provided that suits your personal circumstances.

For HYPers constructing a portfolio, it’s simpler to place the cash in the ISA first then buy the shares. But for those like yourself who already hold shares outside the ISA, then I do find it worthwhile to to make the sale and repurchase in order to relocate the holdings into the ISA. If doing so, watch the timing of xd dates to avoid missing a dividend between the sale and repurchase.

Thanks for your comments on TDL, much appreciated.