Selling stocks & shares ISA and paying into cash ISA

BillG100

Hi,

I'd like to move some money out of my stocks and shares ISA and invest it into a cash ISA to lock in some of the gains. I read this article in the Tele:

The most important thing to remember is never to simply withdraw your money from the investment Isa and pay it into a cash Isa. Doing so will cancel the tax-free benefits.

Surely if you sell £x in your stocks & shares ISA and pay immediately into a cash ISA the tax benefits are not lost? (Assuming you have enough of your annual allowance left to pay the amount in).

The reason I'm asking is because selling from a stocks and shares ISA and paying into a cash ISA seems like an easier and quicker route than going through the transfer process which can take weeks. It also means you know when the sale of your stocks and shares ISA will take place and reduces the risk. For example, I could phone or make an online request for the sale to be actioned today.

Using the transfer process I have no control over when the sale from the stocks and shares ISA would take place, potentially exposing me to more risk in the market.

Can anyone shed some light on why withdrawing money from an investment ISA and paying into a cash ISA in the scenario I've outlined is not advisable?

reeac

It all depends on your view of the future performance of the stock market vs. the 1-2 percent that a cash ISA currently offers. We,ve been moving in the opposite direction when our ca.4 percent ISAs have matured.

pip895

If you aren't/wont otherwise use your isa allowance then you can do this no problem. You will loose some or all of your current year allowance though.

CLAPTON

BillG100 wrote: »

Hi,

I'd like to move some money out of my stocks and shares ISA and invest it into a cash ISA to lock in some of the gains. I read this article in the Tele:

The most important thing to remember is never to simply withdraw your money from the investment Isa and pay it into a cash Isa. Doing so will cancel the tax-free benefits.

Surely if you sell £x in your stocks & shares ISA and pay immediately into a cash ISA the tax benefits are not lost? (Assuming you have enough of your annual allowance left to pay the amount in).

The reason I'm asking is because selling from a stocks and shares ISA and paying into a cash ISA seems like an easier and quicker route than going through the transfer process which can take weeks. It also means you know when the sale of your stocks and shares ISA will take place and reduces the risk. For example, I could phone or make an online request for the sale to be actioned today.

Using the transfer process I have no control over when the sale from the stocks and shares ISA would take place, potentially exposing me to more risk in the market.

Can anyone shed some light on why withdrawing money from an investment ISA and paying into a cash ISA in the scenario I've outlined is not advisable?

yes, if your S&S ISA total less that 15k and your haven't yet used (and have no plan to use) this years 15k ISA allowance, then that's fine


In general the advice is good but in your special circumstances then there would be no difference.

jimjames

BillG100 wrote: »

Using the transfer process I have no control over when the sale from the stocks and shares ISA would take place, potentially exposing me to more risk in the market.

As mentioned above you will lose part of your current year allowance.

If you want to know the price/day that you sell then you can do that first and transfer cash.

Personally I can't see a reason to move to cash ISA when rates are so poor though and you can get 4% on equity income or bonds.

BillG100 wrote: »

Surely if you sell £x in your stocks & shares ISA and pay immediately into a cash ISA the tax benefits are not lost? (Assuming you have enough of your annual allowance left to pay the amount in).

Yes the benefits are lost.

You sell £10k of shares into cash. You then withdraw that £10k cash from your S&S ISA. It is no longer tax free.

You then take out a new cash ISA with that £10k so your remaining allowance for the year is only £5k. You've therefore lost £10k of your allowance for this year. If you have no intention of using your allowance then it isn't an issue but if you do want to use it then you have a problem.

If you transfer the £10k into a cash ISA then your current allowance is still £15k.

gkerr4

yeah you just can't do it - its the law - end of.

you HAVE to go through the transfer process - as soon as you withdraw it, its 'out' and you can only pay £15k into an ISA in any single year. If you withdraw it from the S&S and pay it into a cash ISA then the proceeds from the S&S will be considered 'new' money.

now - if you haven't paid into an ISA (cash or S&S) this year and the proceeds from the S&S ISA are under £15k then you can proceed in this way - but you won't be able to put any additional funds (subject to being under £15k in the year) into either.

does that make sense?

better to transfer to be honest - in my experience, if you have sold the shares - and have cash in the S&S ISA, it gets transferred very quickly indeed.

jimjames

AmberPrior wrote: »

Selling or Trading the stock will be the critical. Guarantee that apparent, short and snappy and full facts is given to the actual device. Guarantee that the actual device has purchased the data throughout their whole and that it's evidently comprehended.

I have absolutely no idea what you are talking about. The words might be English but in no particular order.

Reported as spam

Archi_Bald

Yeah, I pressed the spam button on all of AmberPrior posts.

Intrepid2

BillG100 wrote: »

Hi,

I'd like to move some money out of my stocks and shares ISA and invest it into a cash ISA to lock in some of the gains. I read this article in the Tele:

The most important thing to remember is never to simply withdraw your money from the investment Isa and pay it into a cash Isa. Doing so will cancel the tax-free benefits.

Surely if you sell £x in your stocks & shares ISA and pay immediately into a cash ISA the tax benefits are not lost? (Assuming you have enough of your annual allowance left to pay the amount in).

The reason I'm asking is because selling from a stocks and shares ISA and paying into a cash ISA seems like an easier and quicker route than going through the transfer process which can take weeks. It also means you know when the sale of your stocks and shares ISA will take place and reduces the risk. For example, I could phone or make an online request for the sale to be actioned today.

Using the transfer process I have no control over when the sale from the stocks and shares ISA would take place, potentially exposing me to more risk in the market.

Can anyone shed some light on why withdrawing money from an investment ISA and paying into a cash ISA in the scenario I've outlined is not advisable?

Don't do it. We'll unless you have a crystal ball and can predict the future. I think your are viewing all this incorrectly and taking a short term view. This is called "shortism". The savvy investor would keep both the cash and investments absolutely separate. The fact is that cash is for the short term. Emergency funds, planned expenditure etc. and investments are longer term, but it's only the investments that will provide a real return above inflation over time. We'll, if you are lucky enough to have a credible fund manager of course. If you are lucky enough to have a good fund manager with a decent fund mandate, they should be making sure you are invested in the right places. The best fund managers also like the ups and downs of the markets as they use volatility to make more returns. Normal people just cannot predict larger stock market fluctuations and certainly cannot predict the inevitable which is when it goes up again. The best advice is to stay invested ( only if you have a credible fund manager) and keep your cash separate to this. I have seen people try and gauge volatility and you would need to make it a full time job in order to do it properly. Plus you would need to understand fully all the fundamentals of markets, currency etc. I would say that if something like another credit crunch were to occur (ftse down 28%) then this is a good time to fly to quality or move to cash. Then invest close to the bottom of the market. Personally I don't think you will see a downfall like this for a while as a lot of companies are paying record dividends which is a good sign. The PE of the ftse is just over 15 times earnings at the moment, whereas cash and gilts is 65 times earnings.

Intrepid2

jimjames wrote: »

I have absolutely no idea what you are talking about. The words might be English but in no particular order.

Reported as spam

Doesn't make any sense whatsoever

codetown

Most S&S ISA networks (for sure Fidelity, but also others) allow you to sell your shares and keep the proceeds in a Cash Pot waiting for further decisions. It is not well rewarded (maybe 0.5% or less), but it is a very good way to keep your money within the ISA at zero risk until you see the next chance to get into something.

Or alternatively you could invest in a low cost cash-based fund (low-term bonds etc) and still be in the S&S ISA.