Information Regarding IBUK ISA (Individual Savings Account)

1.       What is an ISA and what benefits does it offer me?

An ISA (Individual Savings Account) is a tax-free savings or investment account that gives you the opportunity to save or invest a certain amount of money every year, without having to pay tax on any growth in your investments or savings. There are 4 types of adult ISA available (stocks & shares ISA, cash ISA, innovative finance ISA , and lifetime ISA).  The interest on cash accumulates on a tax-free basis, as does income and capital gains made on investments.


A stocks and shares ISA lets you invest in “qualifying instruments” such as stocks and shares, funds, etc. A stocks and shares ISA is not an investment in its own right.  The best way to think of a stocks and shares ISA is as a ‘wrapper’ with which you can shelter your savings and investments from both Income Tax and Capital Gains Tax. The IBUK Stocks and Shares ISA lets you choose from a range of investments to invest in (see below section 10 ‘What can I invest in?’). You can select and manage your IBUK Stocks and Shares ISA yourself or arrange for your financial advisor to do so on your behalf (see below section 8 ‘Can I appoint a financial advisor to manage, on a discretionary basis, my IBUK Stocks and Shares ISA?’).


When deciding which type of ISA to open, you should consider the pros and cons of each so that you can choose the type that best fits with your personal needs, circumstances and financial goals. We offer stocks and shares ISAs only.


Tax treatments depend on your individual circumstances and may change in the future.

 

2.       What ISA types are offered at IBUK?

Interactive Brokers (U.K.) Limited (IBUK) only offers stocks and shares ISAs (including, Junior Stocks and Shares ISA). IBUK does not offer cash ISAs (including, Junior cash ISA).

 

3.       Who is eligible for an IBUK Stocks and Share ISA?

In accordance with HMRC rules, any individual who is a resident for tax purposes in the UK and over the age of 18 is eligible to open a stocks and share ISA.


Click on the link for additional details:

https://www.gov.uk/tax-foreign-income/residence

 

4.       How many ISAs can I have?

You can only open one of each ISA type in the same tax year. For example, you can't open two stocks and shares ISAs in a tax year, but you could open one stocks and shares ISA and one cash ISA.

 

5.       What is a flexible Stocks and Shares ISA?

ISA flexibility refers to whether you’re able to withdraw from your ISA without affecting your annual allowance. A flexible stocks and shares ISA allows the individual to withdraw funds from their stocks and shares ISA and put them back into it, within the same tax year, without affecting their annual ISA allowance.

 

6.       Does IBUK offer a flexible Stocks and Shares ISA?

No, an IBUK Stocks and Shares ISA isn't flexible. That means you can take money out, but it'll count towards your annual ISA allowance if you pay it back in the same tax year.

https://www.gov.uk/tax-foreign-income/residence

 

7.       Can you lose your money paid into a Stocks and Shares ISA?

The value of investments you hold in your IBUK Stocks and Shares ISA and the income received from them can fall as well as rise. As a result, you may get back less than you invested. Past performance is not an indication of future performance, and some investments need to be held for the long term to achieve a return. The IBUK Stocks and Shares ISA is an execution only service, Interactive Brokers does not provide investment advice.  If you need advice about whether an investment is suitable, you need to consult a suitably qualified financial advisor.

 

8.       Can I appoint a financial advisor to manage, on a discretionary basis, my IBUK Stocks and Shares ISA?

Yes, you can appoint a financial advisor to manage your IBUK Stocks and Shares ISA on your behalf. Click on the link for additional details:

https://ibkr.info/node/134

 

9.       Can I trade on margin under the IBUK  Stocks and Shares ISA?

No. You can only open an IBUK Stocks and Shares ISA under a GBP cash account type. A cash account requires that all transactions are made with available cash or long positions.

 

10.   What can I invest in?

Under a stocks and shares ISA you can invest in any of the following investments (also known as 'qualifying investments'):

  • Shares;
  • Securities issued by Companies;
  • Recognised UCITS;
  • Depository Receipts, American Depository Receipts and American Depository Shares.

 

11.   What exchanges does IBUK support?

HMRC recognised exchanges supported by IBUK:

Country

Exchange

Australia

The Australian Stock Exchange (and any of its stock exchange subsidiaries)

Austria

Vienna Stock Exchange

Belgium

NYSE Euronext Brussels

Canada

NYSE Euronext Brussels

Montreal Stock Exchange

Toronto Venture Exchange (TSX Venture Exchange)

France

MATIF
MONEP

Germany

Frankfurt Stock Exchange

Stuttgart Stock Exchange

Hong Kong

Hong Kong Stock Exchange

Italy

Italian Stock Exchange (Borsa Italia)

Japan

Tokyo Stock Exchange

Osaka Stock Exchange

Lithuania

NASDAQ OMX Vilnius

Mexico

Mexico Stock Exchange

Poland

Warsaw Stock Exchange

Singapore

Singapore Exchange Limited

South Korea

Korea Exchange

Spain

Spanish Stock Exchange (Bolsa de Valores in Madrid)

Switzerland

Swiss Stock Exchange (SIX Swiss Exchange)

United Kingdom

London Stock Exchange

United States of America

BATs Exchange Inc

Chicago Board Options Exchange

Chicago Stock Exchange

International Securities Exchange

National Stock Exchange

New York Stock Exchange

NYSE ARCA

NASDAQ OMX PHLX

NASDAQ

 

12.   What is the ISA Allowance for 2022/2023 tax year?

Tax year runs from 6 April to the following 5 April. Each tax year’s ISA subscription limit is specific to that year and can be checked on the HMRC website. 

For the 2022/23 tax year the annual ISA allowance is £20,000 per person. Any of the ISA allowance that goes unused in the current tax year cannot be rolled over to the subsequent tax year. You can divide this cash allowance across multiple ISAs, provided that not more than 1 of each type of ISA is subscribed to in any given tax year. NB.  If you are already subscribed to another stocks and shares ISA in the current tax year, you are not permitted to subscribe to our stocks and shares ISA for the remainder of the tax year.

NB. For each tax year, you can check (via the funding page in Client Portal) how much you have subscribed to your IBUK Stocks and Shares ISA and the maximum amount that you can contribute to your IBUK stocks and shares ISA in that tax year, assuming you have not contributed to another ISA away from Interactive Brokers.

13.   How do I make subscriptions to my IBUK Stocks and Shares ISA?

You can make one-off payments (wire transfers deposits) as and when you choose, but the combined total of all payments (or subscriptions) must not exceed any given annual tax year allowance (see section 12. What is the ISA Allowance for 2022/2023 tax year?).

 Interactive Brokers accepts wire transfers only, and there is a minimum subscription amount of £1. Your IBUK Stocks and Shares ISA can only have GBP cash.

 

14.   Does Interactive Brokers have any mechanisms in place to ensure customers do not exceed the ISA allowance for the relevant tax year?

Yes. Interactive Brokers has in place internal controls to prevent customers from exceeding the ISA allowance by splitting the customers’ payments (once received by Interactive Brokers) as follows:

  • crediting the allowable subscription to the customer’s IBUK Stocks and Shares ISA; and 
  • crediting the potential over-contribution amount as follows:

o   if you already have other account(s) with IBUK, Interactive Brokers will credit the potential over-contribution amount to such account(s);

o   if you don’t have other account(s) with IBUK, Interactive Brokers will open a new non-ISA cash only (GBP) account on your behalf and credit the potential over-contribution amount to this new and additional account.

 

In either case, Interactive Brokers will notify you (via a pop-up message in the Client Portal, email and Message Center message) of the above actions and you will always have the possibility of withdrawing the potential over-contribution from your other non-ISA account(s) with IBUK (as described above).

Worked example:

Assuming you only have one type of ISA which is an IBUK Stocks and Shares ISA. The annual ISA allowance for 2022/2023 tax year is GBP 20,000. You initially contribute GBP 19,000.

For the same tax year (2022/2023) you then send GBP 2,000 to Interactive Brokers and request such funds to be credited to your IBUK Stocks and Shares ISA.

If Interactive Brokers actioned your request and credited the full amount (GBP 2,000) to your IBUK Stocks and Shares ISA, you would have exceeded your ISA allowance for the tax year 2022/2023 by GBP 1,000 (as the maximum you can contribute for the tax year 2022/2023 is GBP 20,000).

Instead, to prevent over-contribution, upon receipt of your funds Interactive Brokers will carry out the following actions: 

(1) credit your funds (GBP 2,000) to your existing other non-ISA account(s) with IBUK (if you already have one or more accounts).

(2) if you don’t already have an existing other account(s) with IBUK, Interactive Brokers will open a new cash only (GBP) non-ISA account on your behalf and credit your funds (GBP 2,000) to this new and additional account.

(3)  Interactive Brokers will then automatically transfer GBP 1,000 from your other non-ISA account with IBUK to your IBUK Stocks and Shares ISA.  

 

15.   What happens if I exceed my ISA allowance?

 If you have accidentally paid too much into your ISAs you won’t get any tax relief on the excess payments you’ve made. The ISA allowance is a combined annual limit across all adult ISA types (e.g. stock & shares ISA, cash ISA, innovative Finance ISA , and lifetime ISAs).

 

16.   What should I do if I exceed my ISA allowance?

 In the event you oversubscribe to your ISA (in other words your ISA annual allowance was exceeded), you should not attempt to correct the mistake by withdrawing the excess funds from an ISA (including, but not limited to, your IBUK Stocks and Shares ISA). Instead, you should call HMRC’s ISA helpline to explain the situation and inform them about the oversubscription. HMRC will advise you on the next steps.   NB. The ISA allowance for the tax year 2022/2023 is GBP 20,000 (this is a combined limit across all 4 types of ISA (stock & shares ISA, cash ISA, innovative finance ISA , and lifetime ISAs).

 

17.   What is the annual fee for the IBUK Stocks and Shares ISA?

 There is no annual ISA fee at IBUK. Other costs and charges apply, see below section 18 for more information.

 

18.   What are the charges for the IBUK Stocks and Shares ISA?

 £3 per month minimum activity fee.

 One free withdrawal per month. Thereafter, £7 withdrawal fee is applicable.

Click on the link for an overview of our commissions:

https://www.interactivebrokers.co.uk/en/index.php?f=39753&p=stocks

 

19.   What transactions are allowed and what transactions are not allowed in an ISA?

 a)       Example of allowed transactions

An individual subscribes £15,000 into a stocks and shares ISA, £3,000 into a cash ISA and £2,000 into a lifetime ISA. No more than 1 of each type of ISA was subscribed to in the tax year, and the annual ISA allowance of £20,000 was not exceeded.

 b)      Example of disallowed transactions

An individual subscribes £10,000 into one stocks and shares ISA, £2,000 into another stocks and shares ISA, and the remaining £8,000 into a cash ISA. While the individual did not exceed the annual ISA allowance of £20,000, they subscribed funds into more than 1 stocks and shares ISA.

 

20.   How do I transfer my stocks and shares ISA from my current ISA manager to IBUK?

NB. Currently only transfers in of cash from existing ISAs are supported. Transferring of open positions (in-specie transfers) will be available later in Q4 2022.

 You will need to submit a transfer instruction to Interactive Brokers (via the transfer & pay funding page in Client Portal), and if, in IBUK’s discretion IBUK decides to accept the transfer, IBUK will instruct your existing ISA manager to transfer your investments (where IBUK supports such investments) and/or cash into your IBUK Stocks and Shares ISA. Where IBUK does not support all your investments held at your existing ISA Manager, you can either liquidate these investments yourself prior to submitting your transfer instruction to IBUK via Client Portal (any cash proceeds of such liquidation will be transferred into your IBUK Stocks and Shares ISA) or you can instruct IBUK (as part of your transfer instruction via Client Portal) to do so on your behalf.

 

21.   How do I transfer an ISA out of IBUK to another provider?

Any transfer out request from IBUK must be requested via the receiving ISA provider. The requesting broker can email a client-signed transfer form to isa-transfer@interactivebrokers.com or the client may attach a completed form to a web ticket.

 

22.   What are the Transfer Charges?

Interactive Brokers does not charge for transfers (the transferring ISA manager may charge you for transferring investments or cash proceeds to us).

 

23.   Can I cancel my IBUK Stocks and Shares ISA?

You have a legal right to cancel your IBUK Stocks and Shares ISA if you change your mind but there are timelimits on doing so, see below section 24 for more information.

 

24.   How can I cancel my IBUK Stocks and Shares ISA?

 If you want to cancel your IBUK Stocks and Shares ISA, you must do so within 14 days from the date you receive our email confirming the establishment of your IBUK Stocks and Shares ISA (a cancellation must be requested from the Client Portal).

 Cancellation rights will also apply to the receipt of transfer payments.  You have 14 days from the date you receive our email acknowledging the transfer to exercise your right to cancel (a cancellation must be requested from the Client Portal). NB. If you cancel the transfer of your stocks and shares ISA from another ISA manager to IBUK, that ISA manager may not agree to accept the stocks and shares ISA back. This may result in that stocks and shares ISA being closed, and the tax benefits being lost.

 

25.   How safe is your IBUK Stocks and Shares ISA?

IBUK is authorised and regulated by the Financial Conduct Authority, and is approved by HMRC to act as an ISA manager (including in respect of stocks and shares ISAs).  Your account is held with IBUK’s US affiliate, Interactive Brokers LLC, regulated by the US SEC and CFTC and member of the SIPC (www.sipc.org) compensation scheme.

 Your IBUK Stocks and Shares ISA will not be covered by the Financial Services Compensation Scheme (FSCS) in the UK. Instead, your eligible assets are protected from loss under the US SIPC at an amount of up to USD 500,000 (subject to a cash sublimit of USD 250,000). As with all securities firms, this coverage protects against the failure of a broker-dealer, not against the loss of market value of securities. You will not get any compensation only because the value of your investments falls.

 IBUK and Interactive Brokers LLC are part of the Interactive Brokers Group. The Interactive Brokers Group, Inc. is a listed public company trading on U.S. markets under the symbol “IBKR” with a market capitalization of over USD 30 billion, as of Nov 17, 2021. On a consolidated basis, IBG LLC exceeds USD 10 billion in equity capital, over USD 6.2 billion in excess of regulatory requirements. IBG LLC's owners are the public company, Interactive Brokers Group, Inc.  and the firm's employees and their affiliates. Client money is segregated in special bank or custody accounts, which are designated for the exclusive benefit of clients of Interactive Brokers. Interactive Broker’s client equity as of Oct 30, 2021 was USD 380.9 billion.

 

26.   How can I file a complaint with IBUK?

 Customers are actively encouraged to use the WebTicket system for prompt attention.

 A copy of our Complaints Procedure is available here https://www.interactivebrokers.com/en/index.php?f=292 You can also direct your ISA specific complaints via email to isa@interactivebrokers.co.uk (Please note that in order to ensure that your complaint is flagged and given the required attention, Interactive Brokers kindly asks you to state "COMPLAINT" in the subject header field of the email).

 

27.   Are Corporate Actions allowed under my IBUK Stocks and Shares ISA?

Allowed to participate but cannot exceed the annual ISA subscription limit. If it were to exceed the subscription limit, the shares should be transferred to a non-ISA account (see above sections 16 ‘What should I do if I exceed my ISA allowance?’ and 14 ‘Does Interactive Brokers have any mechanisms in place to ensure customers do not exceed the ISA allowance for the relevant tax year?’.

 

28. FX Handling and your IBUK Stocks and Shares ISA

Interactive Brokers will automatically convert currencies when trading non-GBP denominated securities. To do this, Interactive Brokers will engage in “spot” currency transactions on your behalf in order to settle your buy orders or convert the proceeds of a sell order. For opening orders Interactive Brokers will base the exchange rate off the spot exchange rate at the time of trade plus our 0.03% fee. For closing orders any non GBP balances will be closed at the end of the trading day at the closing exchange rate of the day plus our 0.03% fee.

The below example illustrates the cost in GBP of a $1,000 USD Trade

Example GBP/USD Spot Rate: 1.3432/1.3433

Order Type

FX Conversion Rate inc 0.03% fee

Cost of $1000 USD Trade

Buy

1.3430

£744.61

Sell

1.3435

£744.31

 

29. What if I have additional questions?

Our customer services team are on hand to help via phone or email.  If you have any questions about your IBUK Stocks and Shares ISA, please contact our dedicated ISA Support team who are available 8am to 6pm GMT Monday to Friday, excluding public holidays.