Should I take cash out of my ISA or OIC account?

itsanne

I have both S&S ISA and OEIC accounts. I've been transferring the maximum allowance from the  OEIC to the ISA - already done this year's. I would like to withdraw some cash but am not sure which account to take it from. Until now I've transferred from the OEIC to the ISA but not taken any actual cash out of the OEIC account. A quick google throws up the OEIC account as if it were a pension - it's not. I am already in receipt of my pensions. I want to take out £10-15,000. Which account should I take it from? 

EthicsGradient

A quick google doesn't throw any light on what an "OIC account" is - perhaps you mean "OEIC", ie open-ended investment company, often just called a "fund" in investment circles, but it's not an "account" (for instance, your S&S ISA can hold OEICs). If the spelling is right, look in your account provider's documentation for what it is.

itsanne

EthicsGradient said:

A quick google doesn't throw any light on what an "OIC account" is - perhaps you mean "OEIC", ie open-ended investment company, often just called a "fund" in investment circles, but it's not an "account" (for instance, your S&S ISA can hold OEICs). If the spelling is right, look in your account provider's documentation for what it is.

Oops! I started off with accidentally writing OIC instead of OEIC and then continued with the same...

I have two funds of unit trusts. They were originally both ISAs. One was my husband's. I left it too long after he died to simply transfer his ISA to mine, hence doing part of it annually. Since we first opened the ISAs, the fund administrators have changed several times and the name of the funds themselves have now changed too. For now, the amount they're worth is continuing to grow so while I'll probably move the whole lot eventually, that's for another time.

My question is really whether I'd end up paying tax if I remove the money from the OEIC fund rather than the ISA. If so, I'll take it out of the ISA, but if there's no tax then I'll take it from the OEIC.

Thank you for replying, especially when my question caused confusion! (I'll edit it now.)

InvesterJones

I think you're confusing the terminology a bit. S&S ISA is a wrapper - you can hold several types of funds inside a S&S ISA wrapper. OEIC is a type of fund, which you can hold inside your S&S ISA wrapper, or outside it. Unit Trusts are another, different, type of fund, and these can also be held inside your S&S ISA wrapper, or outside it.

I think you're talking about choosing whether to remove money from funds (of any type) outside of your ISA wrapper, or from within it.

If you withdraw from outside of the wrapper then you should check if you will owe capital gains tax - if you make a profit of more than £3000 across a tax year then you will. Note that transfers into an ISA from the funds outside it will still count as a withdrawal so you may still be liable for capital gains tax.

itsanne

InvesterJones said:

I think you're confusing the terminology a bit. S&S ISA is a wrapper - you can hold several types of funds inside a S&S ISA wrapper. OEIC is a type of fund, which you can hold inside your S&S ISA wrapper, or outside it. Unit Trusts are another, different, type of fund, and these can also be held inside your S&S ISA wrapper, or outside it.

I think you're talking about choosing whether to remove money from funds (of any type) outside of your ISA wrapper, or from within it.

If you withdraw from outside of the wrapper then you should check if you will owe capital gains tax - if you make a profit of more than £3000 across a tax year then you will. Note that transfers into an ISA from the funds outside it will still count as a withdrawal so you may still be liable for capital gains tax.

Thank you.
That's exactly what I was choosing. I hadn't considered that transferring into the ISA still counted as a withdrawal, just thought of it as the same as moving money from one bank account to another. I'd better look into it a bit more! 

masonic

An investment would only need to have risen a little over 15% for a £20,000 bed & ISA to give rise to a capital gain you'd need to declare and pay some tax on (though things were more generous a few years back). Once in an ISA, the slate is wiped clean and there are no further tax consequences, so the option to remove from the ISA will always be tax free, but you are limited in what you can put back in.