Bed and Isa

lunaazul

Hi. I've heard about the Bed and ISA concept. Do I have to buy back the same shares I am selling to transfer into an ISA to take advantage of the Bed and ISA or can I just sell the shares, take the profit and move £10,200 straight away into any cash/equity ISA and thus avoid £10,200 of CGT?
Hope this makes sense.
Thanks
Andrew

Linton

lunaazul wrote: »

Hi. I've heard about the Bed and ISA concept. Do I have to buy back the same shares I am selling to transfer into an ISA to take advantage of the Bed and ISA or can I just sell the shares, take the profit and move £10,200 straight away into any cash/equity ISA and thus avoid £10,200 of CGT?
Hope this makes sense.
Thanks
Andrew

CGT is only paid on the profit of a sale, not the absolute value, so unless you acquired the shares extraordinarily cheaply it should not be an issue.

And of course you cant add 10200 to a cash isa in any one year.

Bed and ISA is what you do if you want to keep some shares and currently have some spare annual CGT allowance and some annual spare ISA allowance.

So you sell the shares outside the ISA, pay no CGT assuming that you have not exceeded your annual allowance, and then buy the same shares in an ISA.

Its just a technique to use up currently unused allowances, its not something recognised/regulated by HMRC. If you dont want to buy the same share you dont do it.

lunaazul

Linton wrote: »

CGT is only paid on the profit of a sale, not the absolute value, so unless you acquired the shares extraordinarily cheaply it should not be an issue.

And of course you cant add 10200 to a cash isa in any one year.

Bed and ISA is what you do if you want to keep some shares and currently have some spare annual CGT allowance and some annual spare ISA allowance.

So you sell the shares outside the ISA, pay no CGT assuming that you have not exceeded your annual allowance, and then buy the same shares in an ISA.

Its just a technique to use up currently unused allowances, its not something recognised/regulated by HMRC. If you dont want to buy the same share you dont do it.

OK, so just so I'm clear. I'll be making £50k profit on the shares I will be selling. I have my £10,100 CGT allowance which leaves about £40k liable for 28% CGT (as I'm a high rate tax payer) so I can move £10,200 straight away into a cash and equity ISA which means I would only have to pay the 28% on the £30k odd balance?
Thanks

CLAPTON

lunaazul wrote: »

OK, so just so I'm clear. I'll be making £50k profit on the shares I will be selling. I have my £10,100 CGT allowance which leaves about £40k liable for 28% CGT (as I'm a high rate tax payer) so I can move £10,200 straight away into a cash and equity ISA which means I would only have to pay the 28% on the £30k odd balance?
Thanks

no you completely mis-understand what bed and breakfast and bed and ISA are about

if you make a profit of 50k on the shares you sell then you pay tax on 50k-10,100 = 39,900 at (up to) 28%