putting shares into an ISA wrapper

livingseaside

Sorry if this is a silly question but I have some IBM shares which I would like to put into an ISA wrapper so that the interest is protected from being taxed. Struggling to understand how to do this - do I open a s&s isa and ask company to transfer them over? Thank you

C_Mababejive

There is nothing to be gained from putting shares in a stocks and shares wrapper unless you are likely to make a substantial gain. I shall make the bold assumption that you are not in that position. How many shares do you hold?

Linton

Your gains from the IBM shares will either come from selling them at a profit, or from dividends. In the case of profits from selling you have a an annual allowance of £10900 against Capital Gains Tax and I assume that you are unlikely to make this sort of profit or could spread sales over several years to avoid it. If this is the case using an ISA wont make any difference.

The other income is the annual dividend, which I see is 1.9%. The situation is complicated by the shares being, I assume, US ones. I dont know the tax implications, and whether an ISA protects you from US taxation, so will leave others to comment.

cashbackproblems

It makes no difference as mentioned above, however long term if you build a big enough portfolio/sell some shares in one go then worth it.

Biggles

You can't transfer shares into an ISA anyway. You have to sell them and, if you decide that share still has 'legs', you can open an ISA and then buy the share within the ISA.

If you hold the shares with a UK broker, they may make some small concession on dealing costs and, perhaps, spread if you 'bed and ISA' (ie sell and buy again immediately), but the fact is that if you already have taxable gains, you may need to sell the shares in tranches to avoid CGT.

grey_gym_sock

if you're a higher-rate tax payer, you'd save tax on dividends by using an ISA, but not otherwise. (this applies to both US and UK shares.)

BLB53

I don't think you can put US listed shares into a UK ISA?

grey_gym_sock

you can if your ISA provider lets you (which not all do). shares on any recognized stock exchange are allowed.

Perelandra

Check that you won't be paying higher charges than just holding the shares in a trading account, though. Some providers might charge (say) 0.5% per year on an ISA, which will add up over time.

Freecall

BLB53 wrote: »

I don't think you can put US listed shares into a UK ISA?

You definitely can if you want to, I hold several in my ISA. Not all brokers offer this facility however although many of the well known ones do - check first.

As others have said, unless you have a grip on the need to realize gains prior to buying in an ISA and can manage the tax implications it is probably not for you.

IronWolf

Even in an ISA, IBM dividends are subject to US withholding tax at 30%.

If your broker allows a W8-BEN form this can be reduced to 15% via the double taxation treaty the UK has with US.

Some ISA allow a 'bed' option, which sells and buys back the shares in one transaction to put them into an ISA so check that the provider will do this.