A question of Capital Gains Tax.

fiftydd

I have capital with an investment company after selling my shares in a SIPP and an ISA. I want to purchase Pensioner Bonds and realise that I have limited time left. When I contacted NS&I who provide the bonds, I was told that NS&I don't except transfers from anything other than my own bank account. If I transfer the funds from the investment brokers into my bank account they are instantly subjected to capital gains tax as they have been in sheltered accounts, i.e. a SIPP and an ISA. How can I overcome the tax issue and still be legal? My local tax office is useless for advice.

steelbru

You can't.

You are moving them from tax-sheltered products ( SIPP and/or ISA ) to a non-tax sheltered product ( Pensioner Bond ).

fiftydd

I realise they are subject to tax in a pensioner bond. My querie was how can I avoid paying tax during the transfer from my investments to the pensioner bonds, whilst temporarily in my bank account. Otherwise my funds will be subjected to taxation twice. if you see what I mean.

bowlhead99

If all of your income and gains have been achieved inside tax protected 'wrappers', you don't have capital gains tax to pay.

You can simply take the money out of your ISA and put it in your bank account. There is no capital gains tax to pay on moving money from an ISA to a bank account. Then you can put the money into pensioner bonds. There is no tax to pay on moving money from a bank account to NS&I. While the money is sitting temporarily in a bank account, it will not be generating any gains. It might generate taxable interest, if your bank account pays interest.

If you mean you made some gains in your ISA account and took money out of your ISA into a non-ISA account with the investment company (say £100k) and then made some more gains in an unwrapped account (turning the £100k into £120k), then you will owe tax on those gains, and should not invest all the money into NS&I because you need it to pay your tax.

The only thing I am curious about is you say some of the investments were in a SIPP. There are no capital gains taxes to pay on gains made within a SIPP. However, when you take money out of a SIPP, like getting money out of any pension, you typically need to pay income tax on it.

coyrls

fiftydd wrote: »

I have capital with an investment company after selling my shares in a SIPP and an ISA. I want to purchase Pensioner Bonds and realise that I have limited time left. When I contacted NS&I who provide the bonds, I was told that NS&I don't except transfers from anything other than my own bank account. If I transfer the funds from the investment brokers into my bank account they are instantly subjected to capital gains tax as they have been in sheltered accounts, i.e. a SIPP and an ISA. How can I overcome the tax issue and still be legal? My local tax office is useless for advice.

There is no tax to pay on any transfer out of an ISA. Strictly speaking you can't transfer out of a SIPP, you will need to crystalise the funds and withdraw from the SIPP. If you really want to withdraw your total funds from your SIPP, 25% will be tax free and 75% will be subject to income tax at your marginal rate. There will be no liability for capital gains tax for either the ISA or the SIPP.