Moving shares from trading account to S&S ISA...

s79

...time period question

Hi all, bit of a strange question here, I have a Barclays Market Master account and also a stocks & shares ISA with them too (i.e. they are both handled in the same portal)

I have used up approx £5k of my S&S ISA allowance this year, but I wish to transfer all of my normal trading account shares into the S&S ISA too (approx £5k too). Note both my ISA and normal trading account contain shares for only one company only (for info it's Scancell...an UK AIM listed cancer vaccine company)

Anyway im a bit confused with regards to the transfer period, I think I was told five working days last time i asked, I need to clarify again.

However what i want to know is during that transition time what happens if the share prices fluctuates wildly??...Although not 'that' likely, because it's an AIM share, s0d's law it shoots up in that time! :eek: Or maybe even shoots down.

What effect (if any) does this have for me? Because it may hit a price that i want to sell at, but I assume i can't do anything i.e. sell if they are in transition/limbo??

Thanks in advance

eskbanker

https://wealth.barclays.com/en_gb/smartinvestor/better-investor/what-is-bed-and-isa-and-is-it-worthwhile.html discusses the Bed & ISA process that is the term for what you're planning. It doesn't answer your specific question about how long it takes (this is presumably variable anyway) but yes, it's a sale and repurchase at different times and you could indeed lose (or gain) during that time, as well as having to pay for the transactions.

Malthusian

If your entire account is invested in a single AIM share then I'm surprised you're bothered about the risk of being out of the market during the bed & ISA.

Since the shares pay no dividend (so no income tax), and they would have to treble in value for you to have a potential CGT bill if £5,000 was the purchase cost (which you could still manage by selling up to your allowance), the risk of a sudden rise in price may not be worth the potential tax saving from moving them into an ISA.

It may be better to wait until you have £5,000 cash to hand to move the holding into an ISA without being out of the market. (I.e. put £5,000 of cash into the ISA, purchase ScanCell, and then once that trade has completed, sell the non-ISA account and get the £5,000 back. Same net result as a bed & ISA with no time out of the market.)

gmgmgm

Probably easiest to phone them and ask.

They do these transfers all the time, and most providers will have a sensible process in place to minimise the time you are "out of the market", if at all.

s79

Thank you for you replies eskbanker and Malthusian, much appreciated, and yes Malthusian your idea makes sense, i.e. "wait until you have £5,000 cash to hand to move the holding into an ISA without being out of the market"

Funnily enough I thought exactly the same thing this afternoon! That seems to be the most logical solution.

One thing though...you said - "Since the shares pay no dividend (so no income tax), and they would have to treble in value for you to have a potential CGT bill if £5,000 was the purchase cost (which you could still manage by selling up to your allowance)"

Can you explain that again please, as I know i'm being a bit thick here, i though CGT was 20% on any profit after you've made 10k profit? I.e. 10k is tax free, then you 20% on any profit after that?

I should know this I know!

eskbanker

s79 wrote: »

One thing though...you said - "Since the shares pay no dividend (so no income tax), and they would have to treble in value for you to have a potential CGT bill if £5,000 was the purchase cost (which you could still manage by selling up to your allowance)"

Can you explain that again please, as I know i'm being a bit thick here, i though CGT was 20% on any profit after you've made 10k profit? I.e. 10k is tax free, then you 20% on any profit after that?

I should know this I know!

For CGT to apply, there would have to be a gain of £10K, i.e. the value of these (non-ISA) shares would need to be trebling from £5K to £15K.

s79

Thanks for your reply eskbanker. So if my normal (non-isa) shares were to shoot up to £14,999, I would not have to pay any CGT, but as soon as I cross the £15,000 barrier, I would have to 20% on that? Or is the 20% applicable to the profits "after" the 10k profit? I.e. say they were worth £16,000, how much tax would I pay, and which "bit" of the profit would the CGT apply to?

P.s. Worth having a cheeky peek at LON:SCLP if you haven't done so already. Although i appreciate AIM isnt for everyone!

george4064

What you're looking to do is called a 'Bed & ISA'.

One thing that no-one has specifically mentioned is that the spread on the share price will cost you. Currently the bid-offer spread is about 17.5p-19.5p. That's an approx 14% spread on the share price.

If you own £5,000 worth of shares, lets call that 27,778 shares. You're going to lose out on 27,778 x 2p = £555

So when you buy back the shares in the ISA wrapper, after taking into consideration all the costs (bid-offer spread, dealing commission and stamp duty if applicable) you'll probably end up with about 22,800 shares.

Malthusian

s79 wrote: »

Thanks for your reply eskbanker. So if my normal (non-isa) shares were to shoot up to £14,999, I would not have to pay any CGT, but as soon as I cross the £15,000 barrier, I would have to 20% on that? Or is the 20% applicable to the profits "after" the 10k profit? I.e. say they were worth £16,000, how much tax would I pay, and which "bit" of the profit would the CGT apply to?

The first £11,000 of any gains in the tax year is tax-free (I was using the word "treble" loosely). Gains above that threshold are taxed at 20% if you are a higher rate taxpayer (except residential property and carried interest).

So if you bought the shares for £5,000 (for the sake of argument, I don't know the actual purchase cost), and sold them for £20,000, you have gains of £15,000, your capital gains tax bill is 20% * (£15,000 - £11,000) = 20% * £4,000 = £800.

However, this assumes you sell them all at once. You could sell 60% of your shares and hang on to the other 25% in which case your gain would be £12,000 - £3,000 = £9,000, which is all within your £11,000 allowance so no CGT to pay. Then you could sell the other ///25%/// *edit* 40% after 6 April 2017 when you would have a new annual capital gains allowance.

George is right and I should have mentioned the bid-offer spread earlier given that this is an AIM share. This would still apply on the "reverse bed & ISA" (where you do the purchase first using cash float) so it is very possible that the bid-offer spread you paid would outweigh any tax saving.

Eco_Miser

Malthusian wrote: »

You could sell 60% of your shares and hang on to the other 25%

What do you do with the other 15%? :think:

darkidoe

Non-ISA investment seems very complicated to navigate with all the tax rules. >.< What a pain.