Stocks and Shares ISA

[Patience]

I met some work friends for dinner over the weekend. As we are all of an age, we talked about pensions, retiring and tax, etc. Oh how we have moved on from our chats in our 20s and 30s!

One of the things which took some discussion is the reduction on capital gains allowance to £3k from 6th April 2024.
As we all have sharesaves with our work where we buy a certain amount of shares each year at a reduced price. I generally have 3 off 3 year sharesaves on the go so one matures each year. At the moment, I put the maximum per month that my company allows which is £350.

One of the ladies said that she had been advised that when they are released to us, we need to move it into a stocks and shares ISA. So far so good.

Now for the advice bit, does anyone know how we set up these ISAs and even transfer the money?
From looking at the internet, I believe that we need to use a “platform” and the transfer process is known as a “bed and ISA”.

[OurCreature]

From looking at the internet, I believe that we need to use a “platform” and the transfer process is known as a “bed and ISA”.

Firstly, setting up an ISA. Go to a platform provider website, and make sure that what you are looking at is an 'execution only' provider; you don't want to be paying any more fees than you have to. I use the Halifax and they charge £36 a year for maintaining my stocks and shares ISA. Just read the information given by any provider carefully and if you like what you see you can set the ISA up online.

Secondly, your company shares. I assume they are not in an ISA at present or you would not be asking the question. I think you can't simply transfer them into your ISA; I think you have to sell the shares and then buy them in your ISA.

I know nothing about how capital gains tax works so I can't help you there. I have a share account alongside my ISA with the Halifax, and when they first began umming and ahhing about reducing tax relief on dividend income I began to sell high dividend paying shares in my share account and buying them back in my ISA. All I know about capital gains is the tax-free allowance in a year, so I made sure that the value of the shares I sold in the share account didn't exceed the capital gains allowance for that year. I want to sell some shares in an investment trust this month and buy them back in my ISA to make sure that my dividend income for 2024/25 is well below next year's allowance of £500. The capital gains allowance for 2023/24 is £6,000 and your friend is correct - for 2024/25 it drops to £3,000.

I hope that helps. Please don't take any of this as advice - I'm not qualified to give financial advice. All I can tell you is what I do with my share account and share ISA.

Check everything I have written for factual accuracy!

[Furby]

I am not a financial advisor either and have a similar problem which I have chosen to fix by doing nothing and just paying the tax in april. Dividends income under 10k can just be paid without doing self assesssmemts whereas any capital gains is compulsory self assessment. If you already do self assessment fine otherwise it's worth paying more to be out of that loop. HMRC aren't answering phones and I didn't think they are geared up for the tsunami of savings and dividends tax about to hit in April. So in theory tax can just be paid but I can't be sure yet it actually is possible.

Much about tax is making life massively inconvenient for the sake of saving a few quid and I think best to choose the easiest thing as long as you can buy food and electric which is why I am not an advisor of course.

Savings tax is 20% and dividends tax is 9% (more for high rate but still savings costs more) so I am not sure it's always best to save the shares in an ISA because then can't save the cash in an ISA too.

Another thing to consider is that people advising to set up an account with a monthly fee are always paid commissions for saying this so of course they will say. It isn't always be best for individuals because is complicated sum deciding if fees or taxes are higher and anyway governments move goal posts and what is true today won't be next year.

[Wildrover]

I use A J Bell. They charge 0.25% of the ISA value per year i.e. £25 on a £10,000 ISA and 'I've found them very good - easy to understand website and helpful staff. I don't think OC is quite right in his analysis - normally he is right to say you can't transfer shares from outside an ISA into an ISA but if you are in a SAYE scheme which most company schemes are then you have a grace period which I think is 90 days from when you remove your shares from the scheme when you can transfer them into an ISA. You'll need to check with the ISA provider though as not all providers allow this. If you have a SIPP you could also transfer them into that.