Hi All

I realise this may not be the most appropriate place to raise for my query but thought there might be others within the community that have already sussed this one out.

I've got a Stocks and Shares ISA account with one particular stock broker, and within that account, I've set the option to automatically re-invest dividends back into the shares I have in that account.

I know that  UK tax rules only allow you to  pay into one S&S ISA per year. (and with current limit of £20k per year). Also, I believe  HMRC deems the first S&S ISA you start paying into in the new tax year as the S&S ISA you will be using for that tax year and need to stick with that for the remainder of the year, or otherwise migrate the holdings to a different S&S ISA, so that ultimately you always only have one S&S ISA you are actively paying into in any one tax year.

When the new tax year starts in April, my intention is to switch to trading with a different stock broker and doing so via a new  S&S ISA account I can open with them. Also, instead of moving the shares I hold in my existing S&S ISA account over to the new one, I intend to leave them where they are and simply stop paying any additional funds into that S&S ISA account so to comply with HMRC.

The only concern I have is regards keeping the automatic dividend re-investment option enabled on my current S&S ISA account into the new tax year. Specifically, whether any dividend re-investments that result from this, in addition to me funding my new S&S ISA account, would be seen  as paying  into two S&S ISA accounts in the same tax year (which I know isn't allowed).

I don't think this will be the case from the understanding that these automatic dividend re-investments (although they are effectively first a cash payment into the account that subsequently get re-invested back into the shares, subject to covering the cost of the shares) are not external funds going into the account, and given I won't be funding that S&S ISA account in the new tax year.

Hoping someone can confirm whether I'm right or wrong on this please.

Unlock the rest of this article with a 14 day trial

or Unlock with your email

Already have an account?
Login here