Red and White dragons fight under the edifice of Brexit as the end of the ISA year approaches

March is still a time to get one’s affairs sorted and use the ISA and SIPP allowances by the end of the tax year. It’s been hard to get excited about that this year. The rough Beast of Brexit slouches towards whatever it’s denouement will be. We seem hell-bent on turning a sackful of Great British Pounds into a sack of Lesser British (for the moment) farthings. Life goes on despite all this noise and hum, and the end of the tax year needs dealing with, lest opportunities pass by.

Sharp investors do their lump sum investment into their ISAs as soon as the new tax year starts. That’s because it makes sense, logically. Time in the market, dear boy – it is a corollary of the fact that integrated over decades markets march skywards. The reason most of us don’t do that is because we fear taking a market crash the day after we invest. If you invest over 20 years the 19 years it doesn’t happen will cancel out the effect of the one year it does, but, well, loss aversion and all that. We are irrational that way, slimy meatsacks that humans are.

Many have the good excuse that they have to earn the money that goes into the ISA over the year,  but that doesn’t apply to me. I ran the other way, and extracted £20k from my Charles Stanley ISA earlier this year. I figured there was a chance of a lot of shit doing down sometime this year. It didn’t happen, so I didn’t run out of money, and I have shifted that 20k into iWeb. So I am fully invested this tax year. Wait, but surely there’s the possibility of opportunities in the Brexit bunfight? I have more potential capacity even though I have completely used this year’s ISA allowance.

That is because I have more than one ISA. Charles Stanley’s recent price hike meant they are no longer that good for the long term. Their flexibility is useful for a fellow soon to use up cash reserves ahead of drawing my pension. So I am happy to pay their usurous charges for a couple of years in return for flexibility.

People with multiple ISAs need to check they can contribute to an old ISA before the tax year end

If you didn’t put any money into an ISA last year, providers have a nasty habit of stopping you topping up unless you jump through extra hoops. Once upon a time I had aims of keeping the amount with any one ISA provider below the £50k FCA protection limit. That gets unworkable fast, I would have to balkanise holdings across several providers. Although I am cynical about the value of compound interest in getting you to FI, once you are there and provided you don’t draw down1 on a stash, the total does get out of hand fast – all the win with CI is at the end. There’s a diversification case for having two unrelated ISA platforms, but after that it’s diminishing returns. With more providers, your risk of getting timed out for inactivity increases.  I found even after two years of inactivity I had to go through the reactivation process again.

At worst they may need you to go through all the anti money laundering hoops again. It takes time to go through that check, so give yourself  a couple of weeks. Make a test deposit roundabout now, at the latest, if you have left this well alone. Sensible souls who have been pound cost averaging into the market since last April can stop reading and go do something more useful with your time. It’s the first deposit in any tax year where you will run into that sort of grief.

Same holds for a SIPP – each year I shift my SIPP into the crystallised part. Hargreaves Lansdown close the uncrystallised SIPP. I then have to send them a message asking why can’t I deposit money, and they open it again after a few days. So don’t leave topping up to 23:59 on the 5th April because you don’t get any extra time to fix that sort of tiresome problem.

The advantages of a flexible ISA

I shifted the 20k I took out of Charles Stanley early this tax year (reducing their increased fees 😉 ) into my iWeb ISA recently. iWeb think I have used my entire 2018/9 ISA allowance. Charles Stanley say that came out of some previous year’s ISA allowance. CS is a flexible ISA provider, so as long as I put that 20k back before 2019/04/05-23:59 it’s as if nothing happened. I am restoring the status quo; it doesn’t count towards this year’s ISA allowance..

Now I always ask them this question in a secure message, just to have it in writing. I may not be able to rustle up the full 20k. Drumming up 40k in cash is a tough ask for a fellow who hasn’t worked for six years and despises cash as a store of value, particularly in these troubled times. Barclaycard may help me, since I have been using their offer of interest free purchases. Once I get the other side of the tax year, I can ping my SIPP for some cash and Barclaycard can have their money back. Unfortunately I don’t spend enough to make that a huge win, but it’s a few grand I can defer into next tax year.

There’s also the vexed question of what to invest in – this time I invested in Vanguards FTSE100 ETF. I bought it at pretty much the same price I could have done at the beginning of this tax year.  Had I done so, then I would have collected that nice 4% yield over the year, as the man said, time in the market is your friend. I’m a little bit sick compared to what I paid  the last time I bought VUKE but what the hell.

Presumably whatever had been in my SIPP which came out to fund this purchase got a boost from the Brexit bung, since money was still worth something in those innocent days before David Cameron hung up a screen for so many Brits to project the darkness within their souls on. The tosspot doesn’t even have the decency to regret his stupidity –

The rule is simple, Dave. Don’t ask unforced questions where there are some answers you really don’t want to hear. Russian roulette with two chambers, Dave, did ya feel lucky, punk?

Can we send out a search party for British pragmatism and mojo?

And there’s a razor’s edge
That I have lost somewhere
And I would like it back
So if you’ve seen it anywhere…

Suzanne Vega, Neighbourhood Girl

It’s fair enough that Brexit should turn the pusillanimous 48% remainers into gibbering wrecks, lily-livered Europhiles and all round losers that they were, pliably yielding to the yoke of the EUSSR. These guys are roadkill, they aren’t the problem at the moment, they lost the fight and are batted into irrelevance by the mighty steamroller of The Democratic Will of the People. It’s the antics of the other lot that make me wonder if British pragmatism went the way of that razor’s edge.

The inability of the winners to speak with a consistent and coherent voice staggers me. The so-called Brexit negotiations have been conducted by two opposing factions that wrestle under the edifice they are trying to build like Vortigern’s red and white dragons undermining his castle.

It was written in the 15th century in Geoffrey of Monmouth’s History of the Kings of Britain – a house divided against itself will always fall.

Merlin showed Vortigern why his castle would not stand. Where is that wizard now? We need the whole lot of Arthur’s court, the kingdom of Logres in in peril as one kind of insanity fights another. The Fisher King lies wounded  and the land is falling to waste, where is the Perceval that will ask the question, “whom does this Brexit farce serve”? In fact if King Arthur could sort his shit out and awaken from his slumber, pull the sword out of the stone and provide some principled leadership to his benighted kingdom in its hour of need, that would be just dandy.

It seems to me that before anybody even thought about calling Article 50 we needed the battle of the Brexits – which one do we want? The rich kids’ Brexit headed by the public schoolboy gang of BoJo, Jacob Rees-Mogg and Nige, with its emphasis on sovereignty and buccaneering Imperial trading. The rich kids don’t really give a toss about immigration, it’s the power kick they value.

Then there’s the pauper’s Brexit, raising the drawbridge as far as freedom of movement is concerned but by and large trading with the EU as best we can even if it involves – shock, horror, agreements where both sides get something but not everything, rather than the rich kids’ isolationist stance. At the moment the rich kids seem to be winning, perhaps if they manage to finally vanquish the paupers then the Brexit castle may stand, or at least not keep collapsing halfway through construction.

The Brexit referendum is working out more the H.L. Mencken version of democracy that Churchill’s. Other countries are bright enough to require a 2/3 majority for constitutional change, but the trouble is Cameron thought he would win easily because he had no idea of the genuine hardship existing across a large part of the country.

How the hell did it come to this? May’s deal looked serviceable to me, but not to the ultras – a classic exposition of the perfect is the enemy of the good. Hopefully history will show this as overreach by the posh boys. Let’s try the pauper’s version next. On second thoughts, that will be ‘led’ by Jeremy Corbyn, who still doesn’t seem to have worked out what he thinks of it, so it’ll be Groundhog Day for a little while yet.

Corbyn is about as good a reason as you can think of to get the ISA allowance maxed out. I don’t think I’ll ever have an income that will be particularly threatened by his ilk, but capital assets could be a different matter.

  1. the canonical FI/RE aspirant switches from accumulation to drawdown on becoming FI. With the ISA I was lucky enough to be able to switch to drawing down from my SIPP not the ISA, and it makes sense to burn up my SIPP before drawing my main pension at close to normal retirement age. That is why I haven’t drawn down on the ISA. Compound interest works very well for you if you don’t have to draw down on a stash, but that makes it tough to retire early on it. At typical compounding rates, it would be a lot more useful if humans lived 150 years and had an accumulation period of 50 years, rather than the early retiree’s desired 20-30 years. There’s nothing wrong with the theory of CI, it’s the paltry real accumulation rate with typical passive investing that is the problem. Diddle with Monevator’s compound interest calculator. At a real terms compounding rate of  his default 4.5% the results are as follows. Work 30 years (ie retire at 50) and CI doubles the value of your stash compared to accumulating it in a inflation-matching cash account. To triple it you need to work 45 years (and this assumes you reach your peak earning power on starting work and stay there for 45 years, or put in astronomical proportions of your earnings in your early career when you aren’t earning much and calls on your cash are highest) 

26 thoughts on “Red and White dragons fight under the edifice of Brexit as the end of the ISA year approaches”

  1. Although the public chose leave in 2016, it was left to a ‘remain’ parliament to implement the decision. Clearly it is not up to the job. I’m wondering how much longer before Article 50 is cancelled? A very depressing outcome.


    1. It’s the breathtaking ineffectualness that is truly wondrous. Plus the downright rude and offensive babble coming out the likes of the ERG about vassal states and all that. It may be their opinion, but it usually pays to retain a modicum of civility if you want a workable output to a negotiation. Perfidious Albion once used to know what it was doing, and understand that what you thinks and what you says aren’t always the same thing.

      I don’t particularly like TM’s deal, because I don’t like Brexit, but it seems a serviceable way to tick enough of the referendum boxes and meet the headline. Sometimes good enough is good enough, but it appears not – for a significant part of the Brexit crew who got to sink it. I’m absolutely not convinced it’s the Remainers wot did it. The current SNAFU seems to be the result of Brexiters internecine ‘friendly’ fire. I guess the two cohorts may give the lie to ‘friendly’ but in that case we should have had three options on the referendum – posh boys’ ERG Brexit, pauper’s anti-immigration Brexit which is scribbled on the back of an envelope somewhere in Labour, or Remain.

      Sure, Brexit wouldn’t have been carried unless the posh boys’s Brexit were worth < 4% of the vote, but we wouldn't have the current spectacle, which seems to accurately portray that there's no majority for any particular form of Brexit, though the posh boys seem closest to swinging it.


  2. I’m struggling to muster much enthusiasm for the end of this tax year. However, I’ve “borrowed” a bit from my previously fully offset mortgage so that I can max out my pension contributions and stocks and shares ISA to the maximum allowed. Over the coming months I’ll get back to the mortgage being fully offset. I’m using a combination of employment salary sacrifice, 0% credit card deals and a bit of mortgage draw down to ensure that the ISA and pension allowances get fully utilised each year. Hopefully it will be worth it in the next 5 to 10 years.


  3. There is something pythonesque about the brexiteers.

    The black knight like insistence that brexit would go perfectly if only it was done “properly”.

    Or the ERG’s Judea People’s Front type loathing of May’s the People’s Front of Judea style Brexit.

    No wonder the rest of the world is pissing itself laughing at the UK.

    Liked by 2 people

    1. >No wonder the rest of the world is pissing itself laughing at the UK.

      A point well-made in the cheese-eating surrender-monkey EU favouring Grauniad 😉

      at least we’re giving the rest of the world a good laugh. The UK: not just a reality freak show, but also a feel good movie. We fail so they don’t have to.

      Mind you, if May does get her deal through now with the help of the EU guillotining it that will be the ultimate triumph of hope over experience.


  4. I chucked in this year’s final contribution into the SIPP this morning. Will max out my ISA next week, and that will be that.
    I think I’m suffering from Brexit fatigue. This omnishambles playing out every day in the news is beyond tedious, it’s draining.


    1. > omnishambles

      It’s ghastly, isn’t it? Presumably after this there’s going to be a backlog of fixing two years worth of the regular shit that didn’t get addressed due to to Brexit…


  5. I don’t know why all ISAs aren’t flexible. It’s bloody confusing having to weed out which ones are and which ones aren’t. Its unquestionably better for the punter for them to be flexible, so just make them all flexible and be done with it.

    I have some future scenarios where it could potentially save me a good chunk of change, but I’m going to have to do loads of dicking about to sort it.

    On the 150 yr life expectancy for CI, I did once ponder whether interest rates, on aggregate, are fundamentally tied to life expectancy but I’d need a brain the size of two watermelons to prove it!

    On the brexit front, I’ve never been happier with the global portfolio approach, helps me sleep at night for sure.


    1. > I don’t know why all ISAs aren’t flexible.

      Probably because there’s a lot of complication. F’rinstance, say I contributed 5k to CS early in the year, then withdraw 20k (there’s a decent amount more than that from previous years. Do I have 15 k of contribution left + 20k ,or is it something else? I’ve spent a lot more time thinking about this than most, so if I am confuzzled there’ll be others. Since I don’t contribute to CS it’s simple, but it won’t be for most.

      I am sure they can program the right algorithm into their computers, but their telephone/online chat team have to field a whole load more complexity when their punters misunderstand the rules. Which is probably why they jacked up their fees.

      > I did once ponder whether interest rates, on aggregate, are fundamentally tied to life expectancy but I’d need a brain the size of two watermelons to prove it!

      I think they are more linked to the sustainable rate at which energy can be extracted from the ground or, hopefully in future, from renewables. This seems to be a closer proxy for increasing wealth and the required increase in the money supply

      Until Newcomen’s steam engine wealth accumulated glacially slowly – after all the fact that 1/3 of land in the UK is still in the hands of the landed gentry shows the concentration hasn’t lessened that much, it is more the other sorts of wealth have been added.

      I don’t know if we lived twice as long whether the real rate of return on capital would fall by half. I suppose there would be some increase in the much-vaunted human ingenuity brought to bear on solving the impediments to living la dolce vita. OTOH the pressure of overpopulation and associated environmental degradation would be dire. Or maybe not, if we had been living longer for generations, perhaps the reduction in birthrate as extra children shifted from being an economic asset in agrarian societies to being a cost centre as is typical now in the developed world may have happened sooner. We would all be using flying cars powered by renewables by now, standing on the shoulders of twice as many clever and inventive people gone before us. Or maybe I read too much utopian science fiction in the 1960s. As an introvert I still don’t really see that much wrong with humanity becoming Solarians, if we take old Hans Rosling’s chipper population projections rather than Paul Ehrlich’s.

      Liked by 1 person

      1. good point about the energy extraction, sounds very plausible to me.

        I naturally gravitate towards the Roslings and Ridleys of the world, I’d call it quantative optimism. I wonder whether its because what they say is true, or whether its just on message for my particular worldview? Its hard to distinguish.

        I have a bit of a problem with climate change, its not that I don’t think its happening, its more that I think the opposite of it, i.e. some sort of infinite stasis, is just so unlikely to be achievable that its not really worth aiming for. I don’t even think its actually that desirable. Its a bit like thinking it would be great to live forever, spending a day or two thinking about the practicalities, then concluding you’ll stick with being mortal. A change is as good as a rest as they say?

        I think you have to have a very anthropomorphic view of the world to worry overly about climate change. I think its a kind of sentimentality, that no other inhabitant of the world shares. Having said that, I think the majority do have a very anthropomorphic view of the world, its sort of inevitable, part of the human condition (foundation of all religion for example) – so we are where we are!


      2. I have just tried to add money to Charles Stanley on a flexible basis. On the form I have to declare

        “By continuing with this payment, you confirm that you have not exceeded the annual allowance for the 2018/19 tax year.”

        Which obviously I know to be false. So I have had to ask their helldesk via secure messaging

        “May I have your permission to continue past that point making that confirmation though it is not true at all in my case, or do you have a different process for replacing funds withdrawn as opposed to making a new contribution?”

        since obviously I don’t want to make this deposit under false pretences, and I want it confirmed in writing that I can perjure myself in this particular case with Charles Stanley’s blessing.

        Now it wouldn’t be too hard for them to have two forms, one for regular deposits. Or a radio button saying “this year | replacement of previous funds withdrawn since the beginning of this tax year” but they don’t. So clearly running a flexible S&S ISA is pretty high touch for those few people using the flexibility. Let’s face it, ramming money in and out of your stocks and shares ISA with the vagaries of your cash requirements isn’t the canonical path of buy and hold passive investing.

        > A change is as good as a rest as they say?

        That’s kind of easier to support in a world with a lot fewer people and by implication a lot more tolerant of mass migration. After all, birds do it annually, humans have done it historically. Dartmoor was once fertile when Britain was a couple of degrees warmer in prehistoric times. But all this was with a world population of a hundred million. I’m not quite sure that Rosling quite had that in mind, or even the 300 million of the first millennium AD. Probably hence the focus on climatic homeostasis. But as you say, that’s from an anthropomorphic view – most people start from the assumption everything is pretty much like them. It’s probably the trouble with starting from Cartesian epistemology.

        Climate change isn’t the only argument against extracting oil willy nilly IMO. It’s a useful feedstock for a lot of materials, and there’s a certain Do No Harm support too, extractive industries tend to make a mess of things around the action.


  6. Ah yes! You said: “Where is the Perceval that will ask the question, “whom does this Brexit farce serve”? If King Arthur could sort his shit out and awaken from his slumber….”
    Well, we’re off to Wales next week to look out some old stones, and will be passing Camlan, so will give him a shout. Come the 29th we should be in the hills, no phone or wifi and lots of old stones.
    To add to the farce, I’ve just signed the “revoke article 50” petition. Futile, I know but it is funny to watch the numbers go up so fast! We were planning to visit the stones across the water later this year, who knows what that journey will be like then……

    Liked by 1 person

  7. I’m suffering from Brexosis right now – it’s not pleasant to know what’s going on in the world and I would like to stick my head in the sand – but I normally drive home from work with Radio 4 on.

    I too have been tidying up this tax year’s affairs – I’ve more of a focus on VCT allowances as the ISAs are full and SIPP not that preferable for early-FIRE. But it’s funny how few people get excited about the end of the tax years and ISAs and all that – compared with my colleagues drooling over the new 19 plate cars that are gleaming in the car park right now.
    Spending is Social whereas Saving is a solitary pursuit – but at least we have great posts like this from Ermine to keep us company!


    1. > I normally drive home from work with Radio 4 on

      I’d say at the moment if you tune between the stations to FM hiss you would be about as enlightened as hearing the news 😉 Like the spending is social, maybe this is the heart of the problem!

      Liked by 1 person

  8. A nation waits to hear a judgement that decides its future which is hanging in the balance, at the mercy of the ‘leaders’ of govt. & opposition – tweedledum & tweedlestupid – while the Clown-prince Farage leads the 600 across the country in search of the holy grail ……theirs not to wonder why, just to protest for their right to die*. [ * in self-inflicted poverty, but a small price to pay as fully sovereign patriots ] Britin still clinging onto relevance thusly; by showing the world their famously unique sense of humour.


  9. some ISA providers tell you how much left you can still contribute in any tax-year, which is handy. That could show you your remaining allowance inc. any withdrawls you’ve made to help guide you? That would be straightforward:

    i.e. you add 5k to CS early april and it then tells you you’ve got 15k remaining allowance

    then in june, you withdraw 100k from CS and it then tells you you’ve got 115k remaining allowance

    then in sep, you add 115k and it then tells you’ve got 0k remaining allowance

    then end of march you add another 5k and it tells you’ve -5k remaining allowance and that hmrc are sending the boys round?

    you get the picture, that seems simple to me?

    (in a perfect world maybe CS wouldn’t let you exceed the allowance it has calculated for you, or at least give you a stern warning about it?)

    I think why they ask if you’ve exceeded your allowance is that they don’t know what you are getting up to with other providers?

    possibly I’ve missed the nuance which makes the flexibility complicated?


    1. scratch that last comment – I’ve just re-read it and subsequently seen what your getting at as to where the complexity is… you’re right its a bit of a minefield! Maybe I revise my initial comment to ‘none of them should be flexible’ rather than ‘all of them should be flexible’ on the basis of keeping things simple?


      1. I think as you’ve spotted, it’s when you use more than on ISA provider it gets knotty. Though as it happens CS could make life easier, since they know I have drawn 20k from them this tax year, all they need to show is ‘you can contribute £20k plus your remaining ISA allowance for this tax year’.

        Anyway, they have got back to me thusly,

        You are correct, as your Charles Stanley Direct ISA is a flexible ISA you have the choice to pay back in any amount you withdraw, and it will not count as part of your annual allowance. This repayment must be made in the same tax year as it was withdrawn, and to the same account it was withdrawn from.

        As this is a replacement payment it does not count towards your annual allowance. Therefore, you can make a payment of up to £20,000 into your account and you will not be exceeding your annual allowance for this tax year.

        so I have my ticket to ride, in writing. Now for the vexed challenge of sucking nearly every cash sum I have anywhere into my current account, and perhaps persuading a credit card company to lend me some money for a couple of weeks. Only to suck it back again after April 6th, but preserve the allowance for any pension TFLS to protect me against the unlikely possibility that Corbyn gets to move in a consistent enough direction long enough to get elected 😉


  10. Ermine
    I’m afraid that there’s something I don’t understand. Why didn’t you just transfer the £20k from Charles Stanley to iWeb, rather than withdrawing £20k from CS and reinvesting it in iWeb? Then you would still have this year’s ISA allowance to invest with iWeb and could put in another £20k regardless of whether or not it’s a flexible ISA.


    1. @Steve It’s a long story. I withdrew the 20k early in this tax year, basically because I thought I would need to spend it on living costs because I was lending HMRC more than half of it , because I owned two houses for a short while and had to pay the extra SDLT of owning two houses for a while. HMRC returned the overpaid stamp duty, so I had the 20k again after that.

      I am coming close to drawing my main pension sometime next year, I want as much ISA space to shelter the PCLS from Corbyn’s hands. Having put the 20k into iWeb, I need to take as much of my cash savings to put into CS before 5 April. I probably can’t raise the 20k, more like 15k. Very soon after 6 April I will draw that 15k out again because I need it to live on before I draw the main pension. But when my main pension PCLS does show up I will be able to shelter £15k (from previous years) plus 20k (2019/20 ISA allowance) = 35k from Corbyn’s mitts. Which is a good thing in my book.

      Sure, I could have transferred the 20k from CS to iWeb, but I might have struggles to live and to fund the float of the extra stamp duty.

      I have no regular income in the eyes of financial institutions so I can’t borrow money from them. A disadvantage of being FI but not yet drawing a regular pension is you are a financial pariah. I therefore have to be my own lender of last resort via the ISA.


      1. Ok, thanks. Of course, you are assuming that existing ISAs won’t be taxed by a Corbyn government.


      2. > you are assuming that existing ISAs won’t be taxed by a Corbyn government.

        I’m not assuming anything. I’m just trying to reduce the odds of a particular tail risk. I don’t really think an Ermine is rich enough to be worth them giving it mental clock cycles. But a little bit of effort might pay off


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