Taking profits from a stocks and shares ISA

moneyquestions1401

over the years I’ve built up a good portfolio of stocks and shares and cash in ISA’s, always maximising my allowance. I’ve also built up profits and interest payments in the accounts. Now I’d like to take out some of my profits. I have flexible accounts. Now it seems, when I take money out it is taken from the allowance amounts, which need to be replaced within the year so I don’t lose my built up allowance. Anyone know how to take out only the profits without selling the whole portfolio and then reinvesting back to the allowance amounts? Thanks

wmb194

https://forums.moneysavingexpert.com/discussion/6652595/taking-profits-from-a-stocks-and-shares-isa

You're overthinking it and getting confused by the way flexible Isas track the annual allowance. Just withdraw whatever you like. If you've deposited £20k this year and made £100 in dividends that you withdraw you still have, assuming all other things equal, £20k in the account.

dunstonh

Now it seems, when I take money out it is taken from the allowance amounts, which need to be replaced within the year so I don’t lose my built up allowance. 

That is not correct. Its the ability to replace it within the tax year if you wish. It not a requirement to do so.

poseidon1

I think my current year position with my flexible cash isa with Paragon, can illustrate what you are able to do within the tax year.

My ISA pays out monthly interest from April 2025 onwards to my bank account, towards living expenses ( around £280 pm).

In March I would have received around £3,080 in total. In that month I plan to repay that amount back into the ISA account.

The opening balance in April 2025 was £80k. Once I repay the balance will become £83k and I will start the new tax year with a higher ISA balance, having spent and then recycled the interest received in the year.

I am doing this because I want my cake and eat it, ie live off interest but end up with a higher cash ISA balance than I started with.

I repay the interest because I want to, not because I have to. That is the choice you have also, but it must be within the same tax year.

As it happens, with the decline in interest rates I am likely to transfer the cash ISA back to a stocks and shares ISA . I have a couple with HL and ii, but neither are flexible so I need to decide whether to find a suitable S &S isa, to continue this income recycling system.

Hope this helped.

moneyquestions1401

@poseidon1, many thanks for this. This is what I am trying to do with my Stocks & Shares ISA. During the year my S&S ISA will (hopefully) generate profits. I would like to transfer these profits, each year,to top up a flexible cash ISA, that I use as my pension income. At the end of the tax year I will then top up the S&S ISA from my SIPP. (I am doing this to optimise the income tax payments each year from the SIPP). At the start of each tax year I will also add the additional allowance to the S&S ISA from the SIPP (also taxable) . Over time, the goal is to decrease the amount in my SIPP (which is all taxable on withdrawal - 25% tax free is gone) ) and increase the income from my S&S ISA which is then wholly non taxable. The tax benefit over time is that I have moved the profit making assets into a S&S ISA from the SIPP and I can optimise how & when I pay tax, ultimatly I should end up paying less tax overall as I will be generating all of my profits in the S&S ISA, rather than the SIPP where I will have to pay tax on any profits made as I take drawdown payments. Hope that makes sense.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81889590#Comment_81889590

I like your thinking, which goes a stage further by using your ongoing Sipp as part of the recycling feeder process into the isa. I note you have already exhausted your TFC, so I can understand desire to exhaust the remnants of your taxable Sipp in favour of non taxable ISAs.

For me my Sipp is still in accumulation phase even though long since retired, so no withdrawals at all as yet just adding the usual annual £2880 contribution for the free £720 each year. Eventually, before age 75, will be draining the 25% TFC, since in my case the Sipp can no longer play a role in long term IHT planning which was my original intention a few years back.

Going forward flexibility is the key, and ISAs fits that bill far better than Sipps.