bed & isa

00ec25

I have searched bed & isa threads but remain unsure

I will certainly be a high rate CGT payer under the new rules if I were to sell my share porfolio in one go. None of these are held in existing ISA as most relate to stocks I have held since the 1980s - 1990s. In gross value terms it is about £80,000 and comprises a mix of unit trusts and direct holdings

How do I actually go about bed & ISA?

As I understand it I sell £10,100 of shares each tax year and then place the proceeds in a S&S ISA to avoid future CGT, but:
- what S&S ISA?
- If I buy into a S&S fund I then become exposed to the performance of that fund rather than my original investments?
- Can I run a self managed S&S ISA? How much does that cost in fees (and from whom)?

Before anyone says it I know I could google this but I'm lazy

Lokolo

Fees depend on the provider.

S&S ISA = Stocks and Shares ISA

All you do to bed & ISA, is sell the shares outside the ISA then buy the exact same amount inside the ISA.

The only difference is you won't have to pay CGT.

debbie42

To minimize CGT: sell as many shares as you can to stay within your normal CGT limits. Re-purchase the same shares within the Stocks and Shares ISA. You have a £10,200 annual allowance for a S&S ISA, less any already used on cash ISA. You'll get hit with the spread and stamp duty, and trading charges.

Note: some shares are not suitable for an ISA., so check before you sell!

Mikeyorks

00ec25 wrote: »

but I'm lazy

.......... following your lead, here's one (post #4) I prepared yesterday :-

https://forums.moneysavingexpert.com/discussion/2549579

00ec25

00ec25 wrote: »

I have searched bed & isa threads but remain unsure

Mikeyorks wrote: »

.......... following your lead, here's one (post #4) I prepared yesterday :-

https://forums.moneysavingexpert.com/discussion/2549579

yes, as above, I read that one

do you rebuy before or after 30 days of the sale (ie the CGT B&B threshold)

what I remain unsure of is can I get a self managed S&S ISA wrapper?
in which, for example, I can rebuy aamed share as I want to retain my own share selection rather than liquidate my own selections and simply end up buying units in someone else's managed S&S ISA fund?

anyone got any suggestions for self managed providers and how do their fees compare against each other ? I have started looking on moneysupermarket - are there anyother comparison sites worth looking at?

cheerfulcat

00ec25 wrote: »

do you rebuy before or after 30 days of the sale (ie the CGT B&B threshold)

The 30 day rule doesn't apply to bed & ISA. You can sell and re-buy straight away.

what I remain unsure of is can I get a self managed S&S ISA wrapper?

Yes, there are plenty of brokers who will supply the wrapper. Some charge for the wrapper, others don't. You can buy any ISA-eligible share within the wrapper.

anyone got any suggestions for self managed providers and how do their fees compare against each other ? I have started looking on moneysupermarket - are there anyother comparison sites worth looking at?

I have yet to find a decent comparison site for brokers.

Selftrade, iii, Alliance Trust and Hargreaves Lansdown ( HL for funds only, too expensive for shares ) are all fairly decent providers of the self-select ISA wrapper.

There is a dedicated board for discussion of brokers on TMF, here.

steveksullivan

I've been wondering for a couple of years now whether I should move my shares (only a couple of grands worth....) into a self-select ISA - not so much for CGT reasons but to save the tax on the dividends.

How does this work as the tax is deducted at source?

And can anyone advise whether the costs (bed&ISA and ongoing.....) would make it worthwhile for this level of shareholding?

Lokolo

steveksullivan wrote: »

I've been wondering for a couple of years now whether I should move my shares (only a couple of grands worth....) into a self-select ISA - not so much for CGT reasons but to save the tax on the dividends.

How does this work as the tax is deducted at source?

And can anyone advise whether the costs (bed&ISA and ongoing.....) would make it worthwhile for this level of shareholding?

You only save on dividend tax if you are a higher rate tax payer. Higher rate tax payers need to fill in tax return, of which they declare dividends and then would owe taxman money.

S&S ISA would stop this extra dividend cost going to taxman.

steveksullivan

This is cut and pasted from the Inland Revenue's website - no mention of the tax benefits on dividends only applying to higher rate taxpayers ........ (my highlighting in red)



Q. What are the tax benefits of an ISA?

A. You pay no tax on any of the income you receive from your ISA savings and investments. This includes dividends, interest and bonuses

cheerfulcat

It's a bit complicated but basically dividends are paid net of 10% tax. Dividend tax is no longer reclaimable within a tax wrapper but a higher rate payer has no extra to pay. So the Inland Revenue ( HMRC now, perhaps you are looking at an old page? ) information is slightly misleading, at least for basic rate payers.

Baz_2

steveksullivan wrote: »

This is cut and pasted from the Inland Revenue's website - no mention of the tax benefits on dividends only applying to higher rate taxpayers ........ (my highlighting in red)



Q. What are the tax benefits of an ISA?

A. You pay no tax on any of the income you receive from your ISA savings and investments. This includes dividends, interest and bonuses

You don't pay tax on dividends if you are a basic rate tax payer on shares either in or out of an ISA. So by default it can only benefit higher rate tax payers as they are the only ones who actually pay tax on dividends anyway.