Security Vs Cash ISAs UK

confusedcucumber

5 years ago I participated in a 3 year sharesave scheme at the company I work for. 2 years ago it hit maturity and we were given the opportunity to transfer up to around £2000 into a cash ISA tax free. I haven't touched the rest of the shares which were worth just under 18K at the time since then although when looking at my account they appear to also be under the same ISA under Securities.

The value of the shares have gone up since then to around £31K and now that I am nearing the end of the financial year I was thinking to move some more of the shares to cash within the ISA as I haven't added anything this year and have a 20K limit on ISA additions per year. My issue is that I'm not sure what the tax implications of doing so would be. If I sell my shares am I liable for paying capital gains tax on the sold amount considering they are held within a security ISA? How can I calculate what these capital gains would be?

How can I withdraw the money held within securities? And how much am I realistically walking away with. Any insight would be really helpful as I'm really not knowledgeable about how Security ISAs work. I tried speaking to an agent with my ISA holding company but they were not exactly knowledgeable...

Ayr_Rage

If the shares are really in an ISA there are no tax or capital gains to be paid.

Simply sell the shares and keep the proceeds in the ISA cash balance, then transfer or withdraw as you wish.

Albermarle

Sometimes shares are referred to as Securities.

If the shares are in an ISA, they must be in a Stocks and Shares ISA. You can not hold shares in a Cash ISA.

Also the company can not open ISAs for you. Only you can do that.

I think you need to investigate a bit further.

confusedcucumber

At the time of maturity I did opt to open an ISA and cash in the amount that I was allowed to cash in at the time without paying tax, however it appears that the rest of my shares were put in a security ISA with the same provider, so when I look at my account it has under the ISA section a split between Cash and Securities with the majority being under the securities ISA section.

Newbie_John

Maybe you could name the company? Do you work for ISA provider? What company shares are they?

This is very unusual situation to the point that I believe that you are mistaking things.

If things are in ISA - which as said above - your company cannot open for you, only you can do that - then there's no tax implication, but if they're held in GIA (general investment account account) then typical CGT taxes apply with £3000 tax free - so if £18k became £31k then you can sell about £7k of them this tax year (you paid £4k so £3k gain).

But then again, you're mentioning £20k (£2k cash + £18k) which points at ISA..

If you name the company / provider / shares then it may shed some light.

masonic

This sounds like a SAYE or SIP scheme where the shares were transferred into a S&S ISA. In which case @Ayr_Rage has already answered your question. The shares could have been sold without tax implications as soon as they were deposited in the ISA.

There is no such thing as a "Security ISA" though, which brings into question what you actually have. I remember there was a thread not so long ago where someone thought their Instant Saver Account was an ISA because the initials happened to match!

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81912679#Comment_81912679

I'd forgotten about that - it was actually over a year ago, time flies!

https://forums.moneysavingexpert.com/discussion/comment/81263188#Comment_81263188

jimjames

 20K limit on ISA additions per year. My issue is that I'm not sure what the tax implications of doing so would be. If I sell my shares am I liable for paying capital gains tax on the sold amount considering they are held within a security ISA?

If the shares are already in the ISA then there is no need to sell any to meet any ISA contribution limit or Capital gains tax. Sell them when you need the money not for some arbitrary deadline that has no relevance.

confusedcucumber

It was part of a sharesave scheme.

The company that was used for the sharesave scheme was eqi, this is not the company I work for though.

At the point the sharesave opened the fixed share price was very low as it was during the peak of COVID. At the point of maturity the share price was about 5x the buy in price. It is now almost 8x the buy in price

I instructed to put the max amount of cash into my ISA at the point of maturity that I could tax free and didn't touch the rest as far as I'm aware.

Now when I look at my EQi account it says my ISA has a total value of over 30K with 2.5K being cash and the rest being securities. I.e. shares for the company I work for which have since accrued value. Which is why I was confused that it seems like all my shares went into the ISA even if I didn't cash them in at the time. Which doesn't make much sense from the point of view of capital gains tax implications.

The shares are still shares though and if I look at withdrawing anything it only shows the cash amount I have in there.

Ayr_Rage

Precisely, you have to SELL the shares for cash and then withdraw the funds.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81916964#Comment_81916964

No confusion here. If you want the entire value of the isa represented as cash, you instruct the sale of the shares which have done well for you from the time they were transferred to the isa. There is no CGT on any gain ( which is the whole point of isas) so if you wanted to withdraw the whole lot, you can do.

However, you also have the option to transfer all the resulting cash proceeds direct into a cash isa with a bank/building society, which everyone here would reccomend as your better option assuming you dont intend to spend it.

As regard the £2.5k cash you mention as already sitting there, I do wonder if ( unknown to you ) it is the accumulation of annual dividends paid on the shares since inception of the ISA.

Just an observation, you have personally witnessed the benefit of being invested in the equity market (albeit just shares in your old employer) , compared to having cash sat on bank deposit account earning interest.

It is a good idea to diversify your ISA shares into a more broad based investment spread across the wider equity markets since single shareholdings are at the top end of risk.

However, be curious to know what has now prompted your decision to turn your entire ISA into low interest yielding cash? Are you unhappy the shares have grown at such a rapid rate, and you prefer something far more pedestrian by way of future returns for you?