put shares into ISA?

82much

I have shares in RBS and Santander. Would it be advisable to put these into an ISA wrapper or just kept as 'paper'?
Would it make any difference at all?
I haven't used my ISA allowance yet for this year.

Vortigern

82much wrote: »

I have shares in RBS and Santander. Would it be advisable to put these into an ISA wrapper or just kept as 'paper'?

Are you a higher rate taxpayer?
Do you expect to become a higher rate taxpayer?
Will you hold the shares long enough to make a capital gain in excess of your CGT allowance?

Yes, to any of the above suggests an ISA might be worthwhile, otherwise I wouldn't bother.

BUT there may be a cost in transferring shares to an ISA, There may be an annual cost to keep the shares in an ISA and you may possibly crystallise a taxable capital gain as you have to sell and repurchase to transfer in to the ISA.

Loughton_Monkey

Although a Stocks & Shares ISA is a 'tax free' investment device, you have to consider this:

For any 'portfolio' of Stocks & Shares, we should consider that an 'average' growth of 10% is an extremely optimistic estimate. But let's use it for 'safety'. Hence you need to have a portfolio in the order of £100K before you are making gains that average £10K a year [the current CGT allowance].

Hence the 'tax free' nature of the ISA is only relevant for those who build up their portfolio to that order of magnitude [£100K]

My own attitude has always been to put my significant investments under the ISA wrapper as a matter of course. No harm to it, and every chance it will pay off.

In my own case, however, I only have funds in my ISA. I do have a handful of shareholdings, for historic reasons, which I don't put into my ISA wrapper. Quite frankly, I cannot be 4rsed to do so, and it would make not difference whatsoever because even if they doubled this year, and I sold them, I would still have no CGT liability.

82much

Thank you both very much. Can't see them becoming worth £100,000 any time soon......:mad:

gadgetmind

Loughton_Monkey wrote: »

Quite frankly, I cannot be 4rsed to do so, and it would make not difference whatsoever because even if they doubled this year, and I sold them, I would still have no CGT liability.

It's not just CGT: if you're a higher rate tax payer, there is additional tax on dividend income for shares held outside an ISA.

thenudeone

Loughton_Monkey wrote: »

Although a Stocks & Shares ISA is a 'tax free' investment device, you have to consider this:

For any 'portfolio' of Stocks & Shares, we should consider that an 'average' growth of 10% is an extremely optimistic estimate. But let's use it for 'safety'. Hence you need to have a portfolio in the order of £100K before you are making gains that average £10K a year [the current CGT allowance].

It's certainly not as straightforward as that. The £100k portfolio size mentioned is quite misleading because you only get one CGT allowance a year and it doesn't carry forward if you don't use it.

If you invest just £10k and it grows at 10% pa, and you sell it after 8 years, it will be worth over £21k and you will have exceeded your CGT allowance and will have to pay tax.

It is possible to avoid CGT by continually selling some investments every year to use up the CGT allowance and re-investing them straight away in a different investment, but it requires some planning and will incur charges, which is why an ISA is generally a better place to hold a sizeable portfolio.

gadgetmind

thenudeone wrote: »

it requires some planning and will incur charges

Corporate actions can also force your hand and/or make your record keeping difficult.

Because of the limits of S&S ISA subscriptions, we hold a fair amount of equities directly, and it's a PITA. We'll be moving them into ISAs as fast as we can, always with an eye on CGT and fees, but we'll probably be mid-70s by the time it's done and dusted, and I know for sure I won't be enjoying all the paperwork and calculations at that age!