Trading212 Invest vs ISA

Can someone explain to me the difference between the two. I understand the ISA is tax free, can you explain the tax implications of the Invest accounts, for the UK.

1 Like

All ISA investments are tax free so you pay no tax on dividends or capital gains. Without the ISA wrapper you’d pay tax if your dividends or capital gains were over the allowances. Capital gains tax is only payable when you sell the asset so for many people you can limit that enough each year to avoid having to pay any tax on gains. You can also offset capital losses against gains.

1 Like

Ok understood, so there is no reason I should start investing from an ISA, right?

Secondly, There is a £20,000 limit per tax year (this year atleast). Does that mean I can put a max of £20,000 into the account to invest or does it mean my portfolio can’t exceed £20,000 in value.

Thirdly, day I max my isa, and put £20,000, what happens The next tax Year, does that £20,000 (assuming 0% growth in the portfolio) remain and I can add another £20,000

1 Like

Please read my reply, forgot to reply to you

1 Like

£20k is max you can put in, doesn’t matter what the value does after that. Next tax year is completely separate and another £20k can be invested. Hope that’s clear.

2 Likes

Not sure what you mean about no reason you should start investing from an ISA.

2 Likes

So there is an Invest account and an ISA account in trading212. So there is no benefit in using a trading212 invest account right?

So the next year when I add another £20k, does that merge with my previous years portfolio

1 Like

The only time you should use an invest account is if you exceed 20k investment in a given tax year?

1 Like

ISA is good as it protects your earnings from Tax, so if you are eligible, it makes sense to start your investing in the ISA and then use the Invest account once you have reached your yearly deposit limit for the ISA but still have more funds you wish to invest with.

Alternatively, not everyone has access to the ISA account and so Invest is the normal account to go with for these people.

The tax year changes on April 5th, so if you deposit the full £20k now, on April 6th you can deposit another £20k as the yearly limit will be reset. there is no restriction to how much money you can have inside your portfolio, only how much you can put in. do note that if you take any money out, this will not lower your deposit amount, so if you deposit and withdraw £2k ten times, you will have used up your yearly deposit limit.

4 Likes

Depends on circumstances but generally if an ISA is enough to hold your investments for the year and the platform offers the shares etc you want to invest in that should be enough. That also assumes you don’t need to take money out - rules used to be that the maximum was how much you could put in in total and withdrawing money didn’t mean it wasn’t still part of that total. Not sure if rules have changed there. No idea how T212 handles ISA follow on. It may all appear as one account or may be subdivided into tax years. Someone else would have to answer that.

2 Likes

Okay, finally (sorry for all the question, just want to make sure I’m crystal clear with the system)

Say if buy a share in the ISA, then sell it, does that cash contribute to my annual £20k deposit. Same for my dividends.
So if I earn dividends from a share does that contribute to my £20k deposit limit.

1 Like

No they do not contribute to your annual £20k.

2 Likes

Only money you put in counts towards the limit. Any growth, dividends, cash from sales is all just held within the ISA. Cash won’t earn any income, it’s there to be withdrawn or reinvested. So as long as you don’t withdraw cash or dividends and then reinvest they have nothing to do with money going in.

It wouldn’t make sense to include dividends in the 20k as you’re not in control of what your investments earn and could otherwise invest so much and exceed the limit when a special dividend was paid. The money is earned within the ISA, it is not money being added from outside the ISA which is what the 20k applies to.

2 Likes

Thank you to both of you, your replies have been extremely useful and informative.

Appreciate it.

1 Like

Hi team - very helpful info!

  • I understand the ISA needs to be in GBP - but can my INVEST account be in USD? still setting up accounts so not locked in to anything as we speak

  • functionality wise / practically speaking - apart from the 20k limit on ISA, (and being locked in to GBP) - is there anything else different? Is it for all intents and purposes the same? Fees wise, or functionality wise of the app. Am i limited say to how much i can withdraw per month or something? Trading times per month?

Trying to figure why someone would NOT have the ISA if from the UK

Thanks in advance guys!

One reason why some would choose an Invest account rather than ISA is that some stocks cannot be purchased in an ISA as they are not ISA compliant. One recent stock of note, that has got a lot of attention recently is the Chinese EV manufacturer NIO.

Note that in Invest you can still realise up to £12,300 of gains and up to £2k of dividends without having to pay capital gains tax.

Also there is the option of making the most of your investments in an ISA, completely tax free and if you wish to invest in companies that are not ISA eligible, you can also do that too in an Invest account at the same time. So you get the best of both options. I hope this helps.

A UK investor will certainly want to have an ISA before INVEST. But there may come a time in life that you have more than £20k to invest in a year.

One advantage of an Invest account is that although you must share your profits with HMRC, they also share in your losses, so volatility of net position is less. When down 20‰ on a stock you can shrug your shoulders knowing that the loss can be set against other gains, and so you are really down only 16%.

Thank you very much guys. Very helpful. ISA seems like a no brainer (if you find the stocks you want).

  • Can i have the INVEST account in USD and the ISA in GBP? Or both must be GBP?

  • Withdrawal wise - can you withdraw from both INVEST and ISA with the same flexibility? Any limitations there?

you can only have 1 account with T212 and as such both Invest and ISA portfolio will be in the same account. you choose currency on account creation and ISA only works in GBP so your Invest account would also be in GBP according to this logic. Mine is but I forget if that was automatic or by choice, so I assume automatic.

both portfolios can transfer money between them without ever having to leave your account and will face similar time restrictions when withdrawn to a funding source. the ISA limitation means only £20k can be deposited in that portfolio for a given tac year, there are no restrictions on how much you can withdraw however this will not count against your deposit limit to lower your contribution utilisation.

as for why someone might not have an ISA, the assets they wish to invest in may not be ISA compatible and thus cannot be held inside one, so instead they would hold these in other accounts and not set up an ISA. commodities, certain stocks et cetera.

Thank you Dao! extremely helpful!! Was really hoping to have the invest account in USD and ISA in GBP. Very annoying!

Might have to set up something in my spouses name with a different email/username but then switching between accounts will prob get tiresome

thanks again to all!