What happens when you sell shares held in an ISA?

edinburgher

Excuse me if any of these are daft questions, but I'm starting to plan next years S&S ISA and am considering going down the route of choosing individual shares after a few years of sticking exclusively to funds and so it's all new to me.

I'm happy enough with choosing stocks that meet my investment goals, but could appreciate some assistance on the specifics of what happens when you sell shares etc. I will probably be opting for a self-select ISA from https://www.iii.co.uk, so any existing users feel free to chip in :beer:

1. What happens when you sell a share held in an ISA? For example, if I like company x, it tanks 6 months down the line and I decide to sell, does the money remain in a 'holding account' so that I can re-invest the proceeds in another share within the ISA wrapper?
2. Is there any difference between transferring in a cash ISA from a previous tax year to a self-select ISA than transferring it into an ISA used for holding funds?
3. On a related note, how are trading fees paid for a self-select ISA once the end of the tax year has been reached? I obviously can't add more money to the account, so how can I deal? Will the fees come off my total holding - i.e. I sell £100 of shares, get charged £10 and end up with £90 to be re-invested?

Like I say, probably very basic questions, but any helpful comments would be great.

p00hsticks

Not with iii, but from my experience of another self select ISA....

1. Yes the proceeds of any sale stay in the ISA wrapper ready to be reinvested
2. Sorry, don't know
3. In my experience, buying and selling fees & stamp duty come out of the funds within the ISA holding at the time you buy or sell - the options to buy and sell should allow for this (so if you have £5000 in cash within the ISA, you can say that you want to spend that amount in total and it will calculate how many shares you can afford allowing for dealing costs and stamp duty). However any annual admin fee for running the ISA can come from outside.

inflationiscoming

question 1: yes the proceeds move into un-invested cash element of your stocks and shares ISA, so maintains the tax-free status. You can then use that to buy different shares or withdraw it from the ISA

question 2: I did both of these transactions this year and there was no difference for me

question 3: I had a first direct self-select account and it worked the way you describe it - sell £100 shares, get charged £10, leaves you with £90 - so the fees come out of your ISA allowance. My account is with first direct and i made relatively few transactions well within the limit so did not look into whether it is possible to pay fees another way

edinburgher

Brilliant - thanks for taking the time to answer :beer:

IronWolf

Your Stocks and shares isa can hold cash, it just doesnt get any interest. So when you first open it you transfer in laods of cash. likewise when you sell a share the cash sits in your isa until you buy another share.

Companies have different fees, but for iii.co.uk all you pay is £10 when you buy and £10 when you sell. So make sure you have enough cash in the ISA to buy/sell shares.

edinburgher

but for iii.co.uk all you pay is £10 when you buy and £10 when you sell

Assuming I'm not trying to time the markets (which I'm definitely not!), can't I get around the £10 buy cost by transferring in a pile of cash and then purchasing using Sharebuilder for a more reasonable £1.50/trade?

I was aware of the selling fee, but this will hopefully be buy and hold investing into good qualities that I'd want to retain for the foreseeable.

p00hsticks

IronWolf wrote: »

Companies have different fees, but for iii.co.uk all you pay is £10 when you buy and £10 when you sell. So make sure you have enough cash in the ISA to buy/sell shares.

Don't forget to allow for 0.5% stamp duty if you buy more than £1000 worth of shares

Ark_Welder

p00hsticks wrote: »

Don't forget to allow for 0.5% stamp duty if you buy more than £1000 worth of shares

£1000 limit is for certificated trades. Electronic trading has stamp duty reserve tax applied on all purchases.

westy22

Assuming I'm not trying to time the markets (which I'm definitely not!), can't I get around the £10 buy cost by transferring in a pile of cash and then purchasing using Sharebuilder for a more reasonable £1.50/trade?

I don't think iii have any maximum limit for a transaction using Sharebuilder so, on that basis, you should be OK to do this.

edinburgher

£1000 limit is for certificated trades. Electronic trading has stamp duty reserve tax applied on all purchases.

Thanks, I was aware of this tax

I don't think iii have any maximum limit for a transaction using Sharebuilder so, on that basis, you should be OK to do this.

Cheers - my plan had been to buy in £5k chunks split between my chosen companies. That said, I'll need to be good and continue saving the cash to allow for £5k chunks