Re-ISAing Investment Funds

beccauk

Could do with some advice from the experienced on here...

I inherited three investment funds from my mother's estate (all RBS), which are currently valued at around £55,000 all together. My mum held these funds in an ISA wrapper, which unwrapped itself when she died.

I'd ideally like to re-wrap these funds over the next few tax years. My understanding is that I have two options here:

1) Cash out everything, re-wrap £15,240 in April (probably with someone else), and put the rest elsewhere until the following tax year.
2) Cash out £15,240 each year until the RBS funds deplete.

My concern with option two is tracking Capital Gains Tax. It's easy to work out now because (I believe) the value of the funds on her date of death is what I use as the date of acquisition, so cashing out everything is the easiest method of measuring any gains/losses. If I were to withdraw small amounts over time, I'm concerned I would struggle to do the maths, unless there's a simple formula I'm missing.

In terms of a new investment, I'm looking at either an actively managed fund, or a passive one (Vanguard seem to be mentioned frequently on here). I have considered purchasing stocks, but I suspect this requires monitoring frequently, which I probably can't commit to. I also have zero prior experience doing this.

The Intelligent Finance ISA looks interesting, too, but I think it's best to watch what happens in Year 1 before committing any money there. I foresee the likes of Ratesetter getting flooded with more cash than they need.

So, in short, would I be best cashing everything out (and taking a hit on the returns during this time) or trickling it out the funds? Or something else?

joerugby

It's relatively easy to use each year's ISA allowance to wrap existing funds. The process is known as "bed and ISA" - google it!.

You simply instruct your broker each April how much you want to wrap and he will do it for you. With HL you can do it online.

Linton

The CGT allowance is £11100 for 2015-2016. Since you are only sellng £15240 each year you are very unlikely to have made that amount of profit.

grey_gym_sock

beccauk wrote: »

If I were to withdraw small amounts over time, I'm concerned I would struggle to do the maths, unless there's a simple formula I'm missing.

yes, there is a simple formula.

hopefully you have recorded for each fund: i inherited T units, which were valued at C.

then if in any tax year you sell N units of a given fund, which gives you proceeds of S,

then the cost of the units sold is

C x (N / T)

(i.e. a proportion of the original valuation)

and therefore the chargeable gain is

S - ( C x (N / T) )

this assumes that the only time you've acquired units in this fund (excluding purchases inside ISAs) is the one occasion when you inherited them.