Can I roll S&S into an ISA?

MattMontreal
MattMontreal Posts: 56
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edited 25 November 2023 at 9:53PM in Savings & investments
Hi,

I’m new to stocks and shares Investing but I’d like to get started. I don’t have any ISA room for this year but I wanted to get the ball rolling now with a couple thousand in a non-ISA account, then roll that into an ISA next tax year. 

I’ve been looking at the MSE guides on investing but I can’t see anything about restrictions on withdrawing your money, just that you should try and stick with it long term.

Can I safely assume that I can just pick my platform and start doing some investing and then just withdraw and stick that in an ISA next year with no penalties etc? Or perhaps it’s possible to get an account that can be “flipped” to ISA at a given point?

Any help would be greatly appreciated.
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  • DavidAC
    DavidAC Posts: 286
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    It's called bed and ISA. Do a search and you should find the answer.
  • I did, and you’re right - just what I was looking for. Cheers, David!
  • If you sell your non-ISA shares and buy them back into an ISA you will lose money because of the bid/offer spread and because of the 0.5% stamp duty.  
    Reed
  • masonic
    masonic Posts: 22,909
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    edited 26 November 2023 at 11:56AM
    It rather depends on the circumstances as to whether there would be any loss due to a bed & ISA. For example:
    • If the investment platform does not charge a trading fee, the ISA is prefunded, and the investment being transacted is a single-priced OEIC or Unit Trust, there will be no loss as the buy and sell orders can be placed at the same valuation point, there is no spread, and stamp duty is not charged on fund trades.
    • For a dual-priced open-ended fund as above, there would just be the bid/offer spread.
    • If, however, the investment is an ETF, there would be bid/offer spread, and more likely a trading fee (which may be discounted as part of a Bed & ISA promotion by the platform), but no stamp duty as ETFs are not subject to stamp duty either.
    • Likewise for AIM shares
    • If, however, the investment is a UK-listed Investment Trust or company share, all of the above, plus stamp duty (+PTM levy if >£10,000) would be payable.
    • For non-UK investments and/or non-Sterling investments, there may be other considerations, such as forex.
  • So if I'm right in thinking there's not typically an option to just flick a switch and change an existing non-ISA into an ISA account, the question would be whether it's better to just wait until the new tax year with the funds in a regular savings account and create a new ISA at that point.

    More specifically: whether the potential gains from 4mo of sitting in the S&S account outweigh the fees from closing/reopening.
  • ColdIron
    ColdIron Posts: 8,682
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    More specifically: whether the potential gains from 4mo of sitting in the S&S account outweigh the fees from closing/reopening.
    I think you could usefully spend that 4 months learning about investing rather than jumping in at the deep end and 'start doing some investing'
    What were you thinking of investing in? Trading individual company shares based on gut instinct or one, perhaps two, large collective funds investing in thousands of global companies? Would you trade daily or buy and hold for 10 years or more
    The answer to questions like these would far outweigh any fees
  • masonic
    masonic Posts: 22,909
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    edited 26 November 2023 at 12:34PM
    So if I'm right in thinking there's not typically an option to just flick a switch and change an existing non-ISA into an ISA account, the question would be whether it's better to just wait until the new tax year with the funds in a regular savings account and create a new ISA at that point.
    More specifically: whether the potential gains from 4mo of sitting in the S&S account outweigh the fees from closing/reopening.
    Some providers may have a process that is seamless from the perspective of the customer, but at a minimum it must involve funding an ISA, placing a couple of investment orders, and awaiting settlement of those investment orders. Investments cannot simply be moved into an ISA except in very limited circumstances.
    The probability of a sensible equities-based investment beating cash over a 4 month period is better than 50%, but not by much.
  • Albermarle
    Albermarle Posts: 21,207
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    Put it in a easy access savings ISA and then follow the advice from @ColdIron .

    I think you could usefully spend that 4 months learning about investing rather than jumping in at the deep end and 'start doing some investing'

    Reading this forum regularly would be a good start.

    By the way if you are employed, you should have a workplace pension that will be invested in stocks and shares already. 
  • MattMontreal
    MattMontreal Posts: 56
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    edited 26 November 2023 at 8:14PM
    I can't put it in an ISA of any kind because I'm at my limit already for this year. Hence the waiting until April.

    FWIW I would probably start out with funds, perhaps the odd individual stock if it's something I know a lot about and believe in, but mostly I'd like to ease into things. No daily trading, more like small tweaks every quarter or less. I've got another 20 years of working life so it's no rush.

    I do have a workplace pension, via Aviva, where it looks like I can go "off piste" and start picking my own funds, etc.. How that does compare with a more "specialised" service?
  • Albermarle
    Albermarle Posts: 21,207
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    I can't put it in an ISA of any kind because I'm at my limit already for this year. Hence the waiting until April.

    FWIW I would probably start out with funds, perhaps the odd individual stock if it's something I know a lot about and believe in, but mostly I'd like to ease into things. No daily trading, more like small tweaks every quarter or less. I've got another 20 years of working life so it's no rush.

    I do have a workplace pension, via Aviva, where it looks like I can go "off piste" and start picking my own funds, etc.. How that does compare with a more "specialised" service?
    Not sure what you mean by a more specialised service? A SIPP will have a lot more choice of investments, but the choice on offer from Aviva will be plenty for most people. In fact 90 to 95% of people with a workplace pension just sit in the default fund and never choose anything else.
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