Bed & ISA - Few Questions

jon52

Hi everyone,

First of all thanks for reading. I've got a few questions regarding Bed and ISA.

Suppose, I need to Bed and ISA "Stock A" worth of £40K to crystalise CGT allowance of £11300 and have no ISA subscription left in current year. Are we allowed to sell say "Stock B" held in ISA account, worth similar amount of around £40K and repurchase this in the general investment account thus freeing up cash in ISA. This will enable me to Bed & ISA "Stock A". Not sure if this is possible though. Hope this makes sense.

Another question is are bed and spouse allowed ? and are the rules different with bed and partner ?

Again, Thanks !

Regards,
Jon

Linton

Yes, you can buy and sell what you want, the only thing that matters is the cash payment into the ISA.

Bed & ISA isnt using any special rules, its just a couple of standard transactions. Once you have sold your Stock A you can do anything you like with the cash except for rebuying stock A outside an ISA/Pension within 30 days. So you can give the cash to your spouse who can do what she likes with it, such as buying stock A.

jon52

thanks for the quick reply. yes i have read somewhere that we are allowed to do bed and isa. I am just not too sure about ... selling stock held in ISA and rebuying it through Normal taxed account in order to increase the ISA amount held inside account to then bed and isa (sort of reverse bed and isa if you ask me). thanks

bowlhead99

jon52 wrote: »

.

Another question is are bed and spouse allowed ? and are the rules different with bed and partner?

As Linton says, bed and spouse is fine. So is bed and partner, bed and friend, etc. By doing Bed & Something you are just circumventing the rule that says that *you* can't buy back the next morning the same thing you sold last night (bed and breakfast) and have it still be considered "sold" with gains calculated by reference to the original old purchase cost from a CGT perspective.

The obvious difference between bed and spouse and bed and [partner or trusted friend] is that if you have a spouse you can often take advantage of their own CGT allowance by gifting them some of your shares before they are sold so that it's them selling the shares instead of you. If you give or sell shares to your spouse they just move over to their name as a no gain/ no loss transaction and retain their original base cost for CGT. So then when you sell the £40k (or whatever) of shares between the two of you, there's still as much gain per share but it's split between two people and you have 2x £11300 annual exemptions to use up in the current tax year alone (ie over £40k of gains can be made within the next month, straddling a tax year for each of you)

bowlhead99

jon52 wrote: »

thanks for the quick reply. yes i have read somewhere that we are allowed to do bed and isa. I am just not too sure about ... selling stock held in ISA and rebuying it through Normal taxed account in order to increase the ISA amount held inside account to then bed and isa (sort of reverse bed and isa if you ask me). thanks

If you sell stock B inside an ISA, the tax man doesn't know you have sold stock B because he doesn't get to look at the contents of the ISA - no sales ever need to be reported.

So there's no issue in buying B outside an ISA as it could never be matched with a sale of B inside an ISA for CGT purposes, as the stuff that happens inside an ISA doesn't need to get tracked or reported anywhere for CGT purposes.

Alexland

bowlhead99 wrote: »

bed and friend, etc.

Please bowlhead99 tell us more about this technique - sounds v interesting. I know you like to elaborate on detail and possibilities...

bowlhead99

Alexland wrote: »

Please bowlhead99 tell us more about this technique - sounds v interesting...

From a CGT perspective is same as bed and partner or bed and spouse. From a bedroom perspective you might get a slap if you try something funny.

eskbanker

jon52 wrote: »

Are we allowed to sell say "Stock B" held in ISA account, worth similar amount of around £40K and repurchase this in the general investment account thus freeing up cash in ISA. This will enable me to Bed & ISA "Stock A". Not sure if this is possible though. Hope this makes sense.

jon52 wrote: »

I am just not too sure about ... selling stock held in ISA and rebuying it through Normal taxed account in order to increase the ISA amount held inside account to then bed and isa (sort of reverse bed and isa if you ask me).

Your ability to free up capacity within your S&S ISA (when you've used your current year's allowance) will be dependent on whether your ISA provider supports flexible ISAs, i.e. the ability to withdraw cash and replace it within the same tax year without affecting annual allowances....

Edit: looks like I've perhaps misunderstood what OP had in mind!

Tom99

eskbanker wrote: »

Your ability to free up capacity within your S&S ISA (when you've used your current year's allowance) will be dependent on whether your ISA provider supports flexible ISAs, i.e. the ability to withdraw cash and replace it within the same tax year without affecting annual allowances....

[FONT=Verdana, sans-serif]The OP is not planning to take any cash out of the S&S ISA just sell £40k of stock B and reinvest the proceeds in stock A.[/FONT]

capital0ne

jon52 wrote: »

Are we allowed to sell say "Stock B" held in ISA account, worth similar amount of around £40K and repurchase this in the general investment account thus freeing up cash in ISA. This will enable me to Bed & ISA "Stock A". Not sure if this is possible though. Hope this makes sense.

1. Of course you can sell stock in an ISA - it's your ISA after all.
2. You can buy similar stock in a non-ISA account - this has no bearing on your ISA account.
3. I don't see how this frees up cash in your ISA, the only cash is from the sale in point 1.
4. Bed and ISA is of course available if you have NOT used your ISA allowance. Bed and ISA is new money money going into an ISA, just because you may have funds in the ISA to buy the bedded shares is not relevant.

Simples.

Malchester

I may be confused with this thread but

Can I sell stocks held in an ISA within an ISA wrapper, keep the cash proceeds within the ISA wrapper in a fund platform and then invest in different stocks in an ISA? I have always assumed that I can as long as the cash proceeds remains within an ISA wrapper. And this does not affect the annual ISA allowance