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Last minute ISAs – your questions answered

We answer some of the frequently asked questions we get around the end of the tax year.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

As the end of the 2018/19 tax year approaches, you might have some quick questions about ISAs you’ve been meaning to ask but haven’t had the time.

In this article, we take a look at the most common questions about ISAs we get at HL at the end of the tax year.

  1. How much can I put into an ISA before 5 April?

    Each tax year (6 April to 5 April), there’s a limited amount of money you can put into an ISA. This tax year (2018/19), all UK adults can contribute up to £20,000.

    You can split this allowance between a Stocks and Shares ISA, a Cash ISA, an Innovative Finance ISA and Lifetime ISA (if opened under age 40 and you stick within the LISA limit of £4,000) as long as all your contributions combined fall within the overall limit.

  2. What’s the difference between each ISA?

    There are 4 main ISAs you can open or pay into each year. They all have tax benefits, but these do vary. So you’ll want to pick the one that suits your circumstances best. Remember tax rules can change and their benefits depend on your individual circumstances.

    Cash ISA - works like a savings account, except there’s no tax to pay on the interest. Cash ISAs are more appropriate for short-term savings (under five years).

    Stocks and Shares ISA - lets you invest in the stock market and grow your money free of UK tax. We think it’s a better choice than a Cash ISA, for those happy with the risks of investing, if you’re looking to invest for over five years.

    Lifetime ISA - if you’re between 18 and 39 years old, this ISA lets you to save up to £4,000 each year towards your first home or later life and get a 25% bonus from the government. Withdrawals at other times will usually incur a 25% penalty, meaning you could get back less than you put in.

    Innovative Finance ISA - a type of ISA which lets you lend funds directly to other investors through a Peer-to-Peer landing market, free of UK tax.

    Unlike cash, investments can fall as well as rise in value so you could get back less than you put in.

  3. What happens if I take money out of my ISA?

    You can take money out of most ISAs whenever you like. It’s one of the main benefits, and part of the reason why they’re so popular. But remember that investing is for the long term.

    If you’re taking money out of a Lifetime ISA other than to buy you first home, or after age 60, you’ll usually be subject to a 25% government withdrawal charge.

    When you withdraw from an ISA you’ll lose any tax benefits, so any further investments you make with the money after it’s withdrawn might be subject to tax. And you can’t add the money back in without it counting towards your allowance again.

  4. Where can i invest my Stocks and Shares ISA

    Investing in Stocks and Shares ISAs means you have the freedom to invest in a wide range of investments. In the HL Stocks and Shares ISA, for example, you can choose from over 2,500 funds as well as UK and international shares, investment trusts and exchange traded funds (ETFs).

    For investors looking for investment ideas, our experts have hand-picked three income and growth funds that we’re particularly keen on right now. These funds could make great choices for this year’s ISA, in our view. Unlike cash, investments and income can fall as well as rise in value so you could get back less than you invest.

    Show me the funds

  5. Do I have to pick the ISA investments myself?

    Yes. But if you’d prefer to leave all the day-to-day investment decisions to an expert, our Portfolio+ service could help.

    You can choose from six ready-made portfolios with different goals and attitudes to risk. Our team of professionals will look after the underlying investments.

    You’ll need to regularly review the ISA portfolio to make sure it still fits your needs.

    Learn more about Portfolio+

  6. Can I open my ISA now and invest later?

    We understand there’s a lot of uncertainty at the moment. But if you don’t know where or when to invest your ISA, that’s no problem. You can just open your HL Stocks and Shares ISA or your LISA with cash and choose investments later.

    This lets you to secure this year’s allowance, and there’s no need to rush your investment decision. For those who aren’t sure where to invest just yet you can hold cash while you decide.

  7. How many ISAs can I have?

    You can only subscribe to one Stocks and Shares ISA each tax year. So if you’ve already made a Stocks and Shares ISA subscription for the 2018/19 tax year, you can only top up that ISA.

    But if you haven’t subscribed to a Stocks and Shares ISA this tax year, you can open a Stocks and Shares ISA with any provider you’d like. And if you choose to, you can always decide to bring all your ISAs together at a later point and hold them in one place.

  8. Does an ISA transfer count towards my allowance?

    If you’re transferring ISAs from previous tax years, it won’t count towards your current ISA allowance.

    If you’ve contributed in previous tax years, you can transfer to another ISA provider (transfers can take up to 6 weeks to complete) and make use of your full allowance.

    If you decide to transfer from an ISA into a LISA, remember this will count towards your LISA allowance of £4,000 per tax year, but won’t use any of your £20,000 allowance.

    If you’re thinking of transferring, check you won’t incur excessive exit fees or lose any benefits.

    More on transferring

  9. How much does it cost to invest in the HL ISA?

    You’ll never pay more than 0.45% per year to hold investments in an HL Stocks and Shares ISA.

    Other charges will depend on the investments you choose. For example, if you want to buy and sell funds there’s no charge and if you want to buy shares, our dealing charges start at £11.95 per transaction online and fall to as little as £5.95 for frequent traders.

    More on ISA charges

  10. I have a Fund and Share account. Can I move my investments into an ISA?

    You can do what’s called Bed and ISA.

    It involves selling investments that you hold outside an ISA and using the proceeds to open or top up your ISA – all with a single instruction.

    You can choose to repurchase the same investments, buy another investment or just hold cash. It's flexible, cost-effective and is a great way to make use of your valuable ISA allowance.

    Find out more about a Bed and ISA and the charges

    The deadlines for this tax year are:

    Type of investment Online deadline Postal deadline
    Funds 3rd April 5pm 3rd April
    Shares 5th April 3pm 4th April
  11. Can I top up next year’s ISA yet?

    If you’ve used your full ISA allowance with HL and want to start contributing for the next tax year (2019/20), you can get a head start by doing what’s called an ‘early bird top-up’.

    All you need to do is log into your account online and click the ‘top up’ tab and follow the instructions on screen.

    You can also call our Client Support Team on 0117 980 9950. When you call, just ask to top up next tax years’ allowance and they’ll process your application for you.

    We’ll accept the payment from you in advance of the new tax year, but the cash will be held in a non-interest bearing account and no investment instructions will be placed until the new tax year.

    You can give us pending fund instructions, however, you won’t be able to give pending share instructions with this early bird top up.

  12. How can I open my ISA this year?

    With the end of tax year fast approaching, you can choose to open or top up your HL ISA online or over the phone.

    Before you apply, please make sure you’re happy with our terms and conditions (including tariff of charges) and key features.

    It’s quick and easy to get started and typically takes just five minutes online once you have read the important information – all you need is your debit card and national insurance number to hand.

    Or if you’d prefer, you can give our helpdesk a call on 0117 980 9950 to open your ISA over the phone.

    This article is not personal advice. The HL Stocks and Shares ISA is for people who want to choose their own investments. If you’re not sure which investments are right for you, we can put you in touch with an adviser.

A painful mistake?

Don’t miss this year’s ISA allowance. Find out more about ISAs.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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