delisted shares removed from ISA

merlin777

I had some shares in a shares ISA but the company was delisted and halifax had to take them out of my ISA - effectively making a forced withdrawl.

Now that's used up some of my ISA allowance against my wishes. Is there any way i cna put the equivalent cash value back in?

just doesn't seem fair otherwise.

bowlhead99

Withdrawing from an ISA doesn't "use up your allowance against your wishes". Putting things into ISAs uses up your allowance and taking out does not.

What you mean is you have now got assets outside your ISA and if you were to sell them and put the proceeds into your ISA, *that* would use up your allowance. If the company has been delisted you might find that the proceeds of any sale you try to do would not be particularly high anyway, so would not use up much allowance, so you have no real problem fitting the proceeds back in (although it's disappointing that it was a bad investment). But if it's still going strong and just been taken over by an unlisted company and you chose to keep holding your shares rather than take cash, maybe it's a bigger problem.

When the circumstances of an asset change so it's no longer a "qualifying investment" (reorganisation, delisting, takeover etc), the ISA manager has two main things he can try to do to repair the ISA, to keep your ISA compliant and not void.

1) sell them (in which case the proceeds can remain in the ISA), or
2) transfer them to the investor to be held outside the ISA

Often with a share that goes delisted there is no ready market for the manager to sell them, and as such they might get transferred to you direct as the only practical way to "fix" your problem of holding non qualifying investments.

If you didn't want this to happen you should probably have sold before they delisted. If you don't think it's "fair"; how much are the shares which are now outside your ISA allegedly worth (if there was a ready market for them?). That's what would define the size of your problem to see whether you're justified in being upset.

HTH

merlin777

bowlhead99 wrote: »

Withdrawing from an ISA doesn't "use up your allowance against your wishes". Putting things into ISAs uses up your allowance and taking out does not.

What you mean is you have now got assets outside your ISA and if you were to sell them and put the proceeds into your ISA, *that* would use up your allowance. If the company has been delisted you might find that the proceeds of any sale you try to do would not be particularly high anyway, so would not use up much allowance, so you have no real problem fitting the proceeds back in (although it's disappointing that it was a bad investment). But if it's still going strong and just been taken over by an unlisted company and you chose to keep holding your shares rather than take cash, maybe it's a bigger problem.

When the circumstances of an asset change so it's no longer a "qualifying investment" (reorganisation, delisting, takeover etc), the ISA manager has two main things he can try to do to repair the ISA, to keep your ISA compliant and not void.

1) sell them (in which case the proceeds can remain in the ISA), or
2) transfer them to the investor to be held outside the ISA

Often with a share that goes delisted there is no ready market for the manager to sell them, and as such they might get transferred to you direct as the only practical way to "fix" your problem of holding non qualifying investments.

If you didn't want this to happen you should probably have sold before they delisted. If you don't think it's "fair"; how much are the shares which are now outside your ISA allegedly worth (if there was a ready market for them?). That's what would define the size of your problem to see whether you're justified in being upset.

HTH

Thanks, bowlhead. I'm not really that upset for the reason you gave. They currently aren't worth that much and i did prefer moving them to selling them for just a few pounds. I understand why the manager.

I think these shares may well relist and the value pick up again but i won't be able to transfer them back in because I will have used my allowance. Thats where my clumsy reference to using up my allowance comes in - some of my allowance was used buying the shares and now they've been moved out so to me that feels the same as if my allowance was reduced. Don't bother to pick me up on it again - I know that's not technically correct but thats how I feel about it.

What I hoped was, if the manager took out £2k worth of shares because they delisted that I could put £2k back in again to square things up. It looks as though there isn't. As the Halifax put it, it's a risk you take when you use this type of ISA.

bowlhead99

Yeah, I've had shares "die" on me before, and one of the frustrating things is that if they lose most of their value inside an ISA, there's no taxable capital losses to offset against future taxable capital gains

Sometimes you get lucky and they come back from the dead and if there's no tax reason to exit and realise a loss, you might as well keep them in the ISA as long as you can, and see if a miracle happens. But once they delist there's no way to keep them in there.

I know what you're saying about not technically losing your allowance but feeling like you have wasted it. But that's not the fault of the ISA manager or HMRC. If you put £2000 into an ISA wrapper and used it to buy shares in HMV or Woolworths or B&B or Northern Rock, and they go bust or lose some massive irrecoverable percentage, that was clearly a waste of ISA space, of your own doing... But you know you can't just go and stick another £2000 in, if you already used your allowance.

So, if you instead put £2000 into the wrapper and invest it unwisely in ABC plc which drops down to £20 of value and de-lists and pops out of your ISA, that was also a waste of £2000 of ISA space. If it had been allowed to stay in your ISA you would only have "wasted" £1980, but basically you wasted your ISA allowance yourself because it is after all a self select ISA, and there's no reason you'd be allowed to top up if you didn't leave yourself unused ISA headroom in which to do it.

The counterpoint is that when you select well, and you buy £2000 of Lloyds shares for 20p each and they grow to 80p each over a few years, you get £8000 of ISA assets while only using up £2000 of your contribution allowance. If you want the ISA to work like that, and have your wrapper expand with market forces, which presumably you do... then you can't complain too much when you choose badly and it contracts instead of expands

merlin777

That's a much healthier way of seeing it - thanks. :beer:

And as you say, even more positively, as long as they are outside the ISA if they realise a loss I can use it to offset tax.:j