Vanguard General Account v Vanguard ISA

RingoDingo · 23 March at 3:34PM

I have a Vanguard General Account with around £20k (£16k invested +£4k change) , which I'm making regular monthly payments into (£200)

Would I be better to move this into a Vangaurd ISA Account and if so what is the process? Do I have to sell my holdings and the reinvest or can I simply swap the product type?

I have around £4k in savings ISA already

Thanks for any advice

InvesterJones · 23 March at 3:44PM

There's an ISA sub board with some really useful information that may help further :)

But, yes, if you want to shelter the returns from tax (forever), definitely move to the ISA. You will need to sell and buy again inside the ISA wrapper. (Sell, open an ISA account, fund with the sale proceedings, buy funds within the ISA account). Some platforms will do this for you - look for a 'bed and ISA' option or form.

dunstonh · 23 March at 3:53PM

Would I be better to move this into a Vangaurd ISA Account and if so what is the process?

Working out your capital gains tax liability is easier in the ISA than the GIA. i..e none in the ISA.

Paying regular contributions into a GIA creates a string of transactions you need to know the dates, unit counts and unit prices for when you cacluate your CGT liability when you sell.

Do I have to sell my holdings and the reinvest or can I simply swap the product type?

Its a sale.

Better to get this sorted before CGT becomes a problem for you.

JamesRobinson48 · 23 March at 4:37PM

The annual exempt amount for Capital Gains Tax (CGT) is £3k. So if selling from your General Account would crystallise a gain of £4k (as you indicated), you may find yourself having a £1k taxable capital gain to declare to HMRC and therefore, potentially, some CGT to pay. If that's so, you could consider selling part from the General Account by no later than 2 April (the final business day of the current tax year), and the rest no sooner than 7 April (the first business day of the new tax year). That would divide the capital gain between two tax years, enabling you to benefit from two annual exempt amounts. Although, of course, one should not "let the tax tail wag the investment dog".