Is Bed & ISA worth doing in this situation?

BrainWars

I'm trying to plan ahead for next financial year when the ISA allowance resets. I wonder what people would do for this situation?

I currently hold both S&S ISA and GIA with Vanguard. I've already maxed out my ISA allowance this year and have more money invested in the GIA with around £1700 capital gain to date. I'm still investing via my GIA every month. I also have plenty of cash (£20k+) that I can invest further.

Is it worth doing bed & Isa to benefit from the capital gains tax allowance this year, or to leave the money in the GIA to continue rolling and invest new fund directly into the ISA next financial year?

masonic

If it is going to cost you little (there is always swing pricing or spread as a potential cost if not an explicit fee), then harvesting the capital gain might be beneficial. However you would need to refrain from buying back the same investment within 30 days. It does rather depend on when you'd otherwise sell and the tax regime in place at that time, but it would not make things worse.

poseidon1

BrainWars said:

I'm trying to plan ahead for next financial year when the ISA allowance resets. I wonder what people would do for this situation?

I currently hold both S&S ISA and GIA with Vanguard. I've already maxed out my ISA allowance this year and have more money invested in the GIA with around £1700 capital gain to date. I'm still investing via my GIA every month. I also have plenty of cash (£20k+) that I can invest further.

Is it worth doing bed & Isa to benefit from the capital gains tax allowance this year, or to leave the money in the GIA to continue rolling and invest new fund directly into the ISA next financial year?

Assuming you are investing in Vanguard etfs ( rather than unit trust /oeics), this sounds like a sensible low cost way to partly fund your ISA ( in the new tax year 2025/26) and realise small gains within your exemption in the next tax year.

However note that you can't 'bed and isa' unit trusts or oeics, if that is what you are accumulating in your Vanguard GIA.

masonic

poseidon1 said:

However note that you can't 'bed and isa' unit trusts or oeics, if that is what you are accumulating in your Vanguard GIA.

Out of interest, why not? If they can be sold in the GIA and bought in the ISA, there should be no issue.

poseidon1

masonic said:

poseidon1 said:

However note that you can't 'bed and isa' unit trusts or oeics, if that is what you are accumulating in your Vanguard GIA.

Out of interest, why not? If they can be sold in the GIA and bought in the ISA, there should be no issue.

None of the platforms I dealt with ( 4 so far ), support it.
 Probably because there is no real time dealings with OEICs as there is with stocks and shares and etfs, so the day or so delay with completing the unit trust sale cannot be matched with the ISA acquisition on a same day basis. 

I suppose nothing prevents an investor doing it on  a DIY basis and accepting the likely  mismatch between sale and purchase in view of the delay.

Be interested to learn if you have come across any platform that formally  supports  ' bed and isa' with OEICs/unit trusts.

masonic

poseidon1 said:

masonic said:

poseidon1 said:

However note that you can't 'bed and isa' unit trusts or oeics, if that is what you are accumulating in your Vanguard GIA.

Out of interest, why not? If they can be sold in the GIA and bought in the ISA, there should be no issue.

None of the platforms I dealt with ( 4 so far ), support it.
 Probably because there is no real time dealings with OEICs as there is with stocks and shares and etfs, so the day or so delay with completing the unit trust sale cannot be matched with the ISA acquisition on a same day basis. 

I suppose nothing prevents an investor doing it on  a DIY basis and accepting the likely  mismatch between sale and purchase in view of the delay.

Be interested to learn if you have come across any platform that formally  supports  ' bed and isa' with OEICs/unit trusts.

The DIY basis is what I mean. Bed & ISA is the description of the process. Whether or not a provider offers some sort of automated service is a secondary concern, but doesn't stop you performing a Bed & ISA (i.e. selling the investments, taking the cash and subscribing to the ISA, then reinvesting in the investments). With some providers you can claim back the dealing charge when you buy back, but do everything yourself. This is not relevant to Vanguard as there are no dealing charges.

When I have done this in the past, I have used a variation of the process, namely subscribe to the ISA first with additional cash, then place the buy and sell orders on the same day so they execute at the same valuation point and price. OP says that they have plenty of cash available, so this would be my recommendation.

BrainWars

masonic said:

poseidon1 said:

masonic said:

poseidon1 said:

However note that you can't 'bed and isa' unit trusts or oeics, if that is what you are accumulating in your Vanguard GIA.

Out of interest, why not? If they can be sold in the GIA and bought in the ISA, there should be no issue.

None of the platforms I dealt with ( 4 so far ), support it.
 Probably because there is no real time dealings with OEICs as there is with stocks and shares and etfs, so the day or so delay with completing the unit trust sale cannot be matched with the ISA acquisition on a same day basis. 

I suppose nothing prevents an investor doing it on  a DIY basis and accepting the likely  mismatch between sale and purchase in view of the delay.

Be interested to learn if you have come across any platform that formally  supports  ' bed and isa' with OEICs/unit trusts.

The DIY basis is what I mean. Bed & ISA is the description of the process. Whether or not a provider offers some sort of automated service is a secondary concern, but doesn't stop you performing a Bed & ISA (i.e. selling the investments, taking the cash and subscribing to the ISA, then reinvesting in the investments). With some providers you can claim back the dealing charge when you buy back, but do everything yourself. This is not relevant to Vanguard as there are no dealing charges.

When I have done this in the past, I have used a variation of the process, namely subscribe to the ISA first with additional cash, then place the buy and sell orders on the same day so they execute at the same valuation point and price. OP says that they have plenty of cash available, so this would be my recommendation.

Thanks for all the replies! I’m only holding etfs and index funds in my GIA. I was initially curious about the impact of the 30-day rule and if it'd apply to the bed & ISA situation, and whether there might be other factors I hadn’t considered, hence I'd like to know what the others may think!

Masonic – I had a similar idea before but wondered about capital gains. If I subscribe to the ISA at the start of the new tax year and place the buy and sell orders on the same day, wouldn’t the capital gains count toward the new tax year’s allowance instead of the previous year’s?

masonic

Yes, the disposal will be made in the tax year you execute the trades, so if you don't have any allowance or uninvested cash available in this tax year, then you'd have to sell and buy on different days to dispose within this tax year. This could be a sale on Fri 4th April (making sure you don't miss any relevant cut-off time - allow an extra day if in any doubt) and purchase on Mon 7th.