Can I transfer some better performing shares from a self trading account into my stocks & shares ISA without incurring additional charges?
14 April 2021
Question by John
I have some shares kept in an online self trading account platform and also have a Stocks & Shares ISA account on the same platform. Is there a way I can transfer some of the better performing shares from the self trading account into my stocks & shares ISA without incurring any (or at least too many) additional charges?
Answered by Boring Money
In short, the answer is no. Directly held shares through a share dealing account cannot be transferred directly into the tax wrapped ISA. The only means of doing so would be to complete a ‘bed and ISA’ process, which involves selling the shares within the share dealing account and buying the same shares back within the ISA. This does, of course, come with its risks. Differences in the sale and repurchase prices would need to be considered as well as any associated trading costs that might apply, which will be specific to the provider you are using. The other important consideration is Capital Gains Tax (CGT). Any gains that are realised when selling the shares within your share dealing account would be assessed for CGT and could potentially incur a tax charge, if exceeding your annual CGT allowance. It is usually prudent to fully utilise your annual ISA allowance before funding a share dealing account.
There is, however, one slight exception to the above rule, which is where the shares in your share dealing account have accumulated as part of your employers Save As You Earn (SAYE) or Share Incentive Plan (SIP) schemes. Shares up to the value of £20,000 (2020/2021 tax year) can be transferred directly into a Stocks and Shares ISA without consideration of CGT. There is no need to sell and then repurchase the shares, like with the ‘bed and ISA’. You will need to have sufficient ISA allowance available as this will count towards your allowance and is not in addition to. The value of the shares is calculated at the time the transfer is made and so exact values cannot not be known in advance. In order to qualify for this ‘exception’, the shares must be transferred within 90 days of maturity from an HMRC approved SAYE or SIP scheme. The shares must also be eligible to be held within an ISA, which generally means they must be quoted on the London Stock Exchange or AIM.