New Freetrade S&S Isa on top of two ISAs - optimise Capital Gain

Wilde00

Hi guys, thanks as usual for the precious information you share daily on here. I need your reassurance my reasoning is correct
Current situation:
- Stock and Shares ISA on Hargreaves Lansdown (already maxed out for this fiscal year; index funds, long term goal)
- Cash ISA on Barclays (20k GBP, old ISA account I still have. Currently sitting idle on top of my checking account with Barclays)
I also have a Freetrade account (non-ISA) with 4-5k GBP to "play" with single shares.

Now, with the end of fiscal year approaching, I want to be as tax efficient as possible. As a consequence, I was thinking to open a Stock and Shares ISA on Freetrade in order to move those 4-5k invested into an ISA: if those funds keep growing in value as they are doing now, I won't be paying taxes on the capital gain thanks to the ISA wrapper.

Questions for you
- Is this reasoning correct: moving from Freetrade to Freetrade ISA in order to avoid taxes on any future gain of those individual shares I bought?
- I'm aware I can open and own different ISA of the same type, but I cannot pay into two ISA of the same type. Correct?
- As a workaround for the limitation above, can I fully transfer my Barclays cash ISA into the Stock&Shares ISA on HL without affecting the 20k GBP cap per year?
In this case I would :
1. transfer the cash Isa to the existing Stock&Shares;
2. open a Freetrade Stock&Shares ISA
3. move existing Freetrade funds on the new Freetrade ISA and still have allowance up to 20k for the upcoming fiscal year.

Is my understanding correct?

eskbanker

If you've paid into your HL S&S ISA this tax year, then you can't also pay into another S&S ISA with Freetrade during the same tax year, even if you see it as a pseudo-transfer from a non-ISA account with the same provider.  Likewise for 2021/22, you can only pay into one S&S ISA, so think carefully about whether you'd want that to be Freetrade....

Wilde00

Thanks eskbanker! Yes, I paid already for this tax year and you are spot on: I don't want to have the "limitation" of having a full year and 20k linked to Freetrade. 

hence my question: can I "tweak" that by moving my cash Isa to HL (so i will have additional 20k invested there) and then open a new ISA with freetrade on the 7th of april (having the 20k allowance there). basically like having "two 20k allowance" thanks to the cash ISA transfer.

eskbanker

Oh right, I hadn't interpreted your post as meaning that you were looking at the Freetrade ISA as being used only for 2021/22 money but yes, you can do that while also investing £20K transferred from a cash ISA into a S&S ISA with HL.

colsten

Wilde00 said:

In this case I would :
1. transfer the cash Isa to the existing Stock&Shares;
2. open a Freetrade Stock&Shares ISA
3. move existing Freetrade funds on the new Freetrade ISA and still have allowance up to 20k for the upcoming fiscal year.

You don't mention the dates / tax years in which you plan to do this but whenever you do this, you can't flaunt the rule that you cannot deposit more than a total of £20k new money per tax year into your ISAs. ISA transfers obviously don't count as new money but all other deposits do, regardless of where such deposits come from. Specifically, if you move money from a non-ISA Freetrade account into a Freetrade ISA, that money will be new ISA money and count towards your £20k ISA allowance.