ISA advice

berbatov10

Hi I have invested in my cash ISA leaving me £5760 to invest in S and S ISA? I have invested in Post Office shares and want to bed and ISA them. Do I subtract the cost of the Post office shares from my £5760 leaving me just over £5000 to put into S and S ISA?

CLAPTON

I assume you mean Royal Mail shares?

If so you sell the RM shares in the normal way and get cash.

You then buy them (more or less as you wish subject to ISA limits) ) within your S&S ISA

berbatov10

Yes Royal Mail, its always but I want to sel/buy them back into my ISA

CLAPTON

berbatov10 wrote: »

Yes Royal Mail, its always but I want to sel/buy them back into my ISA

if they are not currently in an ISA then the law only allows you to buy new shares in an ISA with cash

bowlhead99

berbatov10 wrote: »

I have invested in Post Office shares and want to bed and ISA them. Do I subtract the cost of the Post office shares from my £5760 leaving me just over £5000 to put into S and S ISA?

Not quite. If you're looking to see roughly how much allowance you'll use up, you don't subtract the cost (~£750), you subtract the current value.

Because, as others have said, when you ask your broker or ISA provider to bed-and-isa them for you, they physically sell the shares outside the ISA, get the resulting cash (after fees), put the cash into the ISA, and then use the cash to buy shares inside the ISA.

If that cash now going into the isa is say £1000, it will use up £1000 of ISA limit, even if it only buys the same number of shares that originally cost you £750 some time ago.

For the purposes of the ISA subscription limit, HMRC doesn't know or care what you originally spent to buy RM shares which are now funding your new S&S ISA contribution. You could have bought £2000 of some share that has gone down in value, or £100 of some share that has gone tremendously up in value, or just got £1000 birthday present from a great aunt.

All they care about is that you are now putting £1000 of cash into the S&S ISA, it doesn't matter whether it came from RM shares or somewhere else, and it doesn't matter whether once inside the ISA you spend it on RM shares or something else.

Your broker might offer you an all in one deal where they sell RM at today's price, move cash into ISA and rebuy RM with it at today's price, for reduced transaction fees. But to HMRC they don't care about the sources and uses of subscription moneys, just the cash amount of the subscription - which will be what your pile of RM shares is worth today, not what it was worth at some point in the past.

bigadaj

OP - just wondered is it really worth your while doing a bed and isa with rm shares?

p00hsticks

bigadaj wrote: »

OP - just wondered is it really worth your while doing a bed and isa with rm shares?

I was jsut about to say the same - if the point of putting them into an ISA now is to avoid CTG then that boat has probably sailed.

As far as I'm aware, when you sell the shares in order to put them into the ISA you'll potentially be liable to CTG on the difference between the price you bought them for and the price you sell them at (although of course you do have a CTG allwance which will more than cover that if you haven't used it elsewhere, assuming that we are talking about only the standard allocation of 750 shares).

The OP needs to ask themselves - if they just had the cash now, would they go ahead and buy RM shares at the current price ? If not, then why do it just to get them in an ISA - why not buy another share instead, or just leave it as cash

lisyloo

What benefit are you hoping to get from putting them into an ISA?

Long term it's a good idea because one day your gains could exceed your CGT allowance.
But for a small amount, I am also wondering if there is any benefit for you.

jimjames

bigadaj wrote: »

OP - just wondered is it really worth your while doing a bed and isa with rm shares?

Tax may be issue if the OP is higher rate and ISA will avoid additional tax bill

bigadaj

jimjames wrote: »

Tax may be issue if the OP is higher rate and ISA will avoid additional tax bill

In theory but for the sums were talking about is it really worthwhile?

Dividends on that amount are going to be tiny, certainly less than £100, so the additional tax is going to what a tenner?

The bed and isa process will wipe out that saving for a couple of years I would have thought.

berbatov10

Guys thanks for the replies, even the ones who said it was akin to asking down the pub, I value your opinions more than that