Have I done the right thing in moving to T212 ISA?

Here’s a situation, have I done the right thing?

I’ve recently moved from interactive brokers a normal investment account to a T212 ISA. It’s going to take me a few years to get the money across in totality due to the 20k allowance.

With my old account at Interactive I had the ability to hold multi currency’s and write options which gained me an extra 2/3% return a year roughly but I would of had to start paying capital gains due to the new changes proposed by the government.

What is the CGT allowance/ changes? The Annual Exemption Allowance (AEA) for capital Gains tax is £12,300 in the 2022/23 tax year. From April 2023 this will reduce to £6,000. This will reduce further to £3,000 from April 2024.

I’m fairly young 31 and the account has a long time to grow and compound. So here’s my question have I done the right thing in sacrificing my options and multi currency account in order to not have to pay capital gains over the years going forward ?

I personally think it’s the correct move but interested to know other people’s opinions.

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Yes. Definately better to have your long term investments growing in an ISA. You save on both capital gains and dividend taxes.

The only circumstance I can think of in which a general investment account might work better would be if you intending to buy and sell USD stocks very frequently. In ISA you will pay 0.15% fx fee each time, whereas in GIA you need not.

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I will probably get a little less of a return by like 2/3% in an ISA as well tho because I carn’t write/sell options contracts I think I’ve made the right choice but not 100%.

Without knowing or going into exact figures, longer compounding wise the savings of no tax in an ISA would mean a several % outperformance for the same performance if that makes sense, as you essentially have to then view tax paid as same as like a platform fee/management fee. Once you can calculate it you can probably use something like this:

To see clearly the impact. Obviously not all gains will be taxed etc as still some allowance but you can play around with your own figures.

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Using an ISA is the best thing ever, you should have started off with it to be honest. Hindsight i know.

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There are a couple of questions here, and it also depends what you invest in, but in general you are probably better off.

I dont think IB offered an ISA wrapper until recently, so you’ve made the correct decision in moving as much as you can from a GIA to ISA.

That leaves the question - is a 212 ISA the best choice, and I would say for most people in my opinion, yes. Dont take this as advice, but this is on the basis that there are no account fees, and you can buy global Equity buy and forget trackers such as HMWO or VWRP, and there are also Lifestrategy ETFs now as well if you want to buy an ETF with some bond exposure, although you would have the 0.15% FX fee on any buys/sells.

Good luck - and well done for filling your ISA, its not an easy feat for most!

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