Bed and ISA with HSDL

enthusiasticsaver

I moved from Cavendish Investments to Halifax last year as our portfolio was getting larger.

We only invest in Vanguard LS60 and both OH and I used our full ISA allowance last year and invested a further £20k each in a share dealing account outside an isa intending to bed and isa it after 6 April 2017. I have done this in previous years with Cavendish and all it involved was filling out a form and they moved the non isa units into my isa account.

Reading the FAQ on the Halifax sharedealing site it looks like we cannot transfer between our unwrapped and isa accounts without selling the units first. Does anyone know a different way of moving £20k from our non isa into our isas ?

bowlhead99

You can't put funds that are not into an ISA, directly into an ISA. You can only subscribe cash into an ISA. It's HMRC rules.

So, the way to end up with your non-ISA funds into an ISA is to sell the relevant shares or units which you want to move, then move the resulting sales proceeds ASAP into the ISA (or perhaps you have already put cash into the ISA yourself and will just put take the sales proceeds back into your bank account), and then finally use the cash in your ISA to buy back the same funds inside the ISA. A process known as bed-and-ISAing.

Previously you were with Cavendish who didn't charge transaction fees for subscribing to funds or redeeming from funds because their platform made its money by charging you an annual percentage of the value that they were looking after for you. One of the things they were willing to do within their fee was a customer-friendly option whereby, on receipt of an instruction from you, they'd get the units sold, put cash into an ISA, and buy back some units with the resulting cash.

But you didn't want that sort of all-in service, you wanted to move to a bare bones sharedealer who charges minimum ongoing fees for maintaining your account and then charges you for every transaction, which you can instruct separately.

we cannot transfer between our unwrapped and isa accounts without selling the units first. Does anyone know a different way of moving £20k from our non isa into our isas ?

That is how it works under ISA regulations. Sell the units first, move the resulting proceeds, buy the units back in the ISA account.

If you want to complicate things you could transfer the holdings back to cavendish, ask them to process a bed-and-ISA transaction and then transfer the resulting ISA back to Halifax . Depending on the respective fee structures at both firms, they may each charge fees to make the transfers of holdings, and it will take some time.

Alternatively just put £20k of fresh cash into your Halifax Sharedealing ISA. Then one day make an order to sell £20k (net of transaction fees) of non-ISA funds and at the same moment, make an order to buy the exact same value of the same funds in the ISA. Assuming there is no bid-offer spread on the fund shares, both sets of trades will go through at the same time at the same price so you will end up with the same number of units and not spend any time 'out of the market'. The cash realised in your halifax non-ISA account from the disposal can be transferred back to your bank account to mostly replace the money you had used to fund the ISA. Obviously, you will be short by the transaction fees on the holdings bought and the holdings sold.