S&S ISA acc to inc

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MrWizard
MrWizard Posts: 32 Forumite
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in Savings & investments
Hello,

So i put some money into a S&S ISA. It is Vanguard acc. Typically afterwards i have one concern

As with a acc all interest is reinvested. If my initial investment grows to a point I'd like to take it as income can i change it easily?

Half of me thinks i did it wrong and should of taken an income account and picked reinvest option.
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  • talexuser
    talexuser Posts: 3,499 Forumite
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    Depends on the platform you used. If each reinvest costs, then it is a waste of money if you don't need the money straight away. If it is free then it should not matter too much in the long term. But to change from acc to inc units should be painless and only cost one sell and buy trade.
  • dunstonh
    dunstonh Posts: 116,376 Forumite
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    edited 14 March 2017 at 1:03PM
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    As with a acc all interest is reinvested. If my initial investment grows to a point I'd like to take it as income can i change it easily?

    It can usually be changed easily. Conversion is easiest but not all platforms do that. So, switch can be used with those. If you go with a fixed regular withdrawal, then it doesnt matter if its inc or acc.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • jdw2000
    jdw2000 Posts: 418 Forumite
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    I was once with TD. I wanted to change my Fund from ACC to INC. I had to sell and then re-buy. It could not be switched.
  • Sean473
    Sean473 Posts: 88 Forumite
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    Yup, you usually have to sell and rebuy from what I've read...Not worth the hassle, might as well get Income from the beginning.
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    edited 14 March 2017 at 1:55PM
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    jdw2000 wrote: »
    I was once with TD. I wanted to change my Fund from ACC to INC. I had to sell and then re-buy. It could not be switched.

    Effectively, you were doing a "switch" because you were redeeming your money out of one fund and subscribing it into another (though processing that switch of money from one holding to the next might need to be a multi-stage process depending on how the platform chooses to set up).

    The distinction that dunstonh was making was between

    - switching your money between funds (coming out of one fund and going into another... which might be a manual or semi automated process depending on platform) versus

    - a "conversion" where (as long as the platform and manager both agree to accommodate it), the manager of the fund literally converts your ACC units into INC units in the same collective investment scheme and the units in the new class are a straight replacement for the old ones, handled internally for you by the manager.

    Assuming conversion requests are not an easy freebie on your platform, you would need to switch your ownership using the standard process on your platform of choice. Going out of and coming into the two different classes might or might not involve a fee and in some cases, a day out of the market while the platform provider waits to see what proceeds you got from redeeming before accepting an order of that amount to subscribe into the other class.

    But it's not a big deal and straightforward to arrange as and when you get to the point you want to take income. For now it saves you needing to reinvest income (and paying fees to reinvest income if your platform has those).

    With it being an ISA there are no tax consequences of disposing of one class of holdings and buying another.
  • badger09
    badger09 Posts: 11,210 Forumite
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    MrWizard wrote: »
    Hello,

    So i put some money into a S&S ISA. It is Vanguard acc. Typically afterwards i have one concern

    As with a acc all interest is reinvested. If my initial investment grows to a point I'd like to take it as income can i change it easily?

    Half of me thinks i did it wrong and should of taken an income account and picked reinvest option.

    Who is your S&S ISA with? Which 'Vanguard' is it?

    Is it one of the Lifestrategy funds? If so, some platforms don't charge to buy & sell funds.

    If your platform does charge, another option would be to put new money into the inc version.
    Sean473 wrote: »
    Yup, you usually have to sell and rebuy from what I've read...Not worth the hassle, might as well get Income from the beginning.

    Hindsight is wonderful:cool:
  • coyrls
    coyrls Posts: 2,432 Forumite
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    MrWizard wrote: »
    Hello,

    So i put some money into a S&S ISA. It is Vanguard acc. Typically afterwards i have one concern

    As with a acc all interest is reinvested. If my initial investment grows to a point I'd like to take it as income can i change it easily?

    Half of me thinks i did it wrong and should of taken an income account and picked reinvest option.

    It seems to me that you've done it now and you don't want income yet. I would just stick with acc units until you do want to take income and make a decision then.
  • Rollinghome
    Rollinghome Posts: 2,676 Forumite
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    bowlhead99 wrote: »
    With it being an ISA there are no tax consequences of disposing of one class of holdings and buying another.
    BH, should we understand from that that outside of an ISA there would be tax consequences or that in some circumstances there could be tax consequences? It seems a complicated area as outlined here: https://www.taxation.co.uk/Articles/2016/01/12/334184/readers-forum-trigger-event
  • MrWizard
    MrWizard Posts: 32 Forumite
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    My provider is HL and it is the VG LifeStratergy 100%.
    It's not a big deal as i will still gain money I'll just take it out when it's accumulated to what I'm happy with. I only put in 4k quickly before end of ISA year as an experiment before I open another fund, right now I'm a newbie as you might of been able to tell.

    I suppose I should always open an income account i didn't know you could reinvest into income account as in theory that turns it into a accumulation fund so why have that in the first place?
  • talexuser
    talexuser Posts: 3,499 Forumite
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    MrWizard wrote: »
    so why have that in the first place?

    Read the thread again. An income fund pays out for people who need the money now. An accumulation fund automatically reinvests for people who don't and want growth. If your platform charges for each reinvestment you get less from reinvesting an income fund compared with the same accumulation fund. Over many years it could make a reasonable difference.
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