Bed and ISA (sort of)

[Arborbridge]

I want to transfer an OEIC holding from a sharedealing account with one broker, and buy the equivalent in an ISA with a different broker.

As far as I can see, there's nothing which would offend the HMRC (30 day) rules if I bought in the ISA with company B, then the same day, or whenever convenient, sell the same OEIC from the share dealing account.

Am I correct?

Arb.

[Lootman]

I want to transfer an OEIC holding from a sharedealing account with one broker, and buy the equivalent in an ISA with a different broker.

As far as I can see, there's nothing which would offend the HMRC (30 day) rules if I bought in the ISA with company B, then the same day, or whenever convenient, sell the same OEIC from the share dealing account.

Am I correct?

That is correct according to everything I have read. Trades that happen within an ISA, whether buys or sells, are effectively not tax events at all. Therefore the 30-day rule does not apply and cannot affect the gain or loss that will be realised in the taxable account, which will stand as is.

[scrumpyjack]

Yes and the same applies if you 'bed and sipp', ie sell shares personally and buy the same shares on the same day in your sipp. You, your ISA and your SIP are separate legal entities and their transactions are therefore entirely unconnected. (ditto bed and spouse)

[Arborbridge]

Yes and the same applies if you 'bed and sipp', ie sell shares personally and buy the same shares on the same day in your sipp. You, your ISA and your SIP are separate legal entities and their transactions are therefore entirely unconnected. (ditto bed and spouse)

Thank you for that - it aligns with how I read it, but you and Lootman have explained the mechanism.

[Arborbridge]

I want to transfer an OEIC holding from a sharedealing account with one broker, and buy the equivalent in an ISA with a different broker.

As far as I can see, there's nothing which would offend the HMRC (30 day) rules if I bought in the ISA with company B, then the same day, or whenever convenient, sell the same OEIC from the share dealing account.

Am I correct?

That is correct according to everything I have read. Trades that happen within an ISA, whether buys or sells, are effectively not tax events at all. Therefore the 30-day rule does not apply and cannot affect the gain or loss that will be realised in the taxable account, which will stand as is.

Thanks for explaining - yes that makes perfect sense. I shall proceed with my plan.

Arb.

[paulnumbers]

I want to transfer an OEIC holding from a sharedealing account with one broker, and buy the equivalent in an ISA with a different broker.

As far as I can see, there's nothing which would offend the HMRC (30 day) rules if I bought in the ISA with company B, then the same day, or whenever convenient, sell the same OEIC from the share dealing account.

Am I correct?

Arb.

I'm not sure what you mean by offend the 30 day rules. You'll crystallize a gain and potentially have tax to pay.

Whether that's something you want to do, or want to avoid, I thought was unclear from your post.

[mutantpoodle]

I agree with Paul

if you sell from a dealing account you will establish a gain or a loss

changing broker would presumably prevent you getting a 'bed and ISA' broker cost deal
but will not affect tax if any due on gains made on the sale

[Arborbridge]

I want to transfer an OEIC holding from a sharedealing account with one broker, and buy the equivalent in an ISA with a different broker.

As far as I can see, there's nothing which would offend the HMRC (30 day) rules if I bought in the ISA with company B, then the same day, or whenever convenient, sell the same OEIC from the share dealing account.

Am I correct?

Arb.

I'm not sure what you mean by offend the 30 day rules. You'll crystallize a gain and potentially have tax to pay.

Whether that's something you want to do, or want to avoid, I thought was unclear from your post.

I'll crystallise the gain, but there won't be any tax due as it will be below the CGT allowance. As others have explained, I can then buy (or at the same time if cash available) the same fund within an ISA without running foul of the 30 day rule on repurchase.

Arb.

[Arborbridge]

I agree with Paul

if you sell from a dealing account you will establish a gain or a loss

changing broker would presumably prevent you getting a 'bed and ISA' broker cost deal
but will not affect tax if any due on gains made on the sale

See my answer to Paul. I realise this establishes a gain, but that's one reason for doing it: using this year's CGT allowance rather than letting the gain run on into another year is an advantage for future plans.

I wish to change brokers because it will be cheaper over the year/years, despite having to pay an extra dealing cost with the second broker.

Arb.

[paulnumbers]

I want to transfer an OEIC holding from a sharedealing account with one broker, and buy the equivalent in an ISA with a different broker.

As far as I can see, there's nothing which would offend the HMRC (30 day) rules if I bought in the ISA with company B, then the same day, or whenever convenient, sell the same OEIC from the share dealing account.

Am I correct?

Arb.

I'm not sure what you mean by offend the 30 day rules. You'll crystallize a gain and potentially have tax to pay.

Whether that's something you want to do, or want to avoid, I thought was unclear from your post.

I'll crystallise the gain, but there won't be any tax due as it will be below the CGT allowance. As others have explained, I can then buy (or at the same time if cash available) the same fund within an ISA without running foul of the 30 day rule on repurchase.

Arb.

Yup. Makes sense.

[Dod101]

It is actually no different from what I have done in the past and asked Interactive investor to sell in my Trading Account and buy back in an ISA or SIPP. It is a non issue. Gengulphus would have given us chapter and verse but the bed and breakfast 30 day rule applies only when both transactions are carried out in a tax unprotected account.

Dod

[Arborbridge]

It is actually no different from what I have done in the past and asked Interactive investor to sell in my Trading Account and buy back in an ISA or SIPP. It is a non issue. Gengulphus would have given us chapter and verse but the bed and breakfast 30 day rule applies only when both transactions are carried out in a tax unprotected account.

Dod

I'd agree, except that I am doing something slightly different. I am buying first in the ISA then selling from a non-ISA. This isn't the same as bed and ISA.

Although, my idea was sound, I thought it wise to ask the brainstrust for confirmation that the HMRC couldn't chase me for tax evasion!

[Gersemi]

It is actually no different from what I have done in the past and asked Interactive investor to sell in my Trading Account and buy back in an ISA or SIPP. It is a non issue. Gengulphus would have given us chapter and verse but the bed and breakfast 30 day rule applies only when both transactions are carried out in a tax unprotected account.

Dod

I'd agree, except that I am doing something slightly different. I am buying first in the ISA then selling from a non-ISA. This isn't the same as bed and ISA.

Although, my idea was sound, I thought it wise to ask the brainstrust for confirmation that the HMRC couldn't chase me for tax evasion!

The point is that purchases and sales within an ISA are not linked in any way with transactions in the same stock in non-ISA holdings. So the timing of the purchases/sales and locations of the taxable holdings in relation to the ISA holdings are simply irrelevant.

The fact that brokers offer 'Bed & ISA' deals is not what makes them work. They work just as well if you orchestrate them yourself as you are doing. The only benefit is that they often apply lower fees to such transactions.

[SteelCamel]

Anything that happens in an ISA simply didn't happen as far as CGT is concerned. So you sold some shares. That's it, you didn't do anything else. As you didn't buy anything, there's nothing for the sale to match with, so it's a sale from your pool.

Actually this is one advantage of ISAs that's often overlooked - "tax-free" doesn't just mean that you don't pay any tax, it means that you don't have to bother with accounting for it for tax purposes at all - it's completely outside the system.

[Lootman]

Actually this is one advantage of ISAs that's often overlooked - "tax-free" doesn't just mean that you don't pay any tax, it means that you don't have to bother with accounting for it for tax purposes at all - it's completely outside the system.

That is true. However should your ISA ever be regarded as taxable in the future for some reason, then you would have to account for it. Examples might be that you move overseas, or the rules change, or your ISA breaks a rule and so becomes ineligible.

And since you never bothered to keep records such as cost basis, and since no tax documentation is sent out in connection with an ISA, then you might really struggle to make the right declarations in that event.

[Arborbridge]

Well, thanks for the replies, and it's clear now that my proposal is sound. And thank you all for explaining why it works from the technical POV.

Arb.