BED to ISA help.

[Alaric]

You could, but the problem is that the dividend goes to the account which you are leaving. If you want to reinvest the dividend it is better to do the transaction a few days in advance of XD, so that the dividend ends up in the correct account.

If you are anywhere near the £ 2,000 limit, minimising the dividend in a taxable account could save tax. So if selling, take the price which includes the prospective dividend.

[Paul2566]

First of all, can you please explain to us all what BED stands for?

I think we all now understand that it's your normal, unsheltered, dealing account, but as you can see from the first couple of replies it's not an acronym that's familiar to folks here, so can you please expand it out to what it stands for.

If you actually mean "bed" (rather than BED), as in "bed and ISA", then that's an action, not the label of an account, and sorry if this sounds pedantic, but when coming to an online forum for help and advice it's really best if you use the lingo of the forum; it helps avoid the sort of puzzlement in the first couple of replies.

Now, on your bed & ISAing ex-dividend strategy ... do I understand correctly that what you are hoping for is to minimise the price of a stock when you do the bed & ISA, both to have a lower price on the sell for CGT purposes, and to facilitate the bed and ISAing of more shares within the £20K limit?

While that looks good in theory, as, yes indeed, all other things being equal, the price of a stock should drop by the amount of the dividend, in reality all other things are never equal and normal market movements may wipe out, or indeed, exaggerate the supposed drop. It also straps you to a date to do the bed & ISA, when the price may be on a high overall.

I do a little of what you intend, in that when it comes to bed & ISA time I procrastinate a bit waiting for lower prices, but I don't look at ex-dividend dates and I don't get too fussed up if a lower price doesn't come.

I always do my bed & ISAing at the end of the tax year. As doug2500 implied, then you know what your CGT position will be and so can arrange to maximise the use of your CGT allowance, with only a limited time window for any unexpected events to blow it. If you do it at the start of the tax year and maximise the use of your CGT allowance then some corporate action, like a takeover, could blow it, and it'd also put a damper on any other trades you may decide to do later in the year that will breach the CGT allowance.

I start thinking about bed & ISAing mid-March and wait for a day when the market is down to do it. A silly little bit of market timing really, which sometimes works out and sometimes doesn't, but it's an amusing way of choosing the day to do it as any.

Most brokers have a bed & ISA service, Halifax's is described here, although YouInvest has a better general description here. The advantages of calling up Halifax and asking them to do it are that they do the buy and sell at the same time, you only pay one dealing fee and you don't have to wait 2 days to transfer the money (and do the buy 2 days after the sell). Note though that the buy and sell is done at a time of their convenience.

Personally I don't use my brokers' bed & ISA services, as the cost of an extra dealing fee isn't a big deal, and I prefer to have control of the timing and it allows me to "tweak" how much I buy. If you use a bed & ISA service they will sell your £1000 of stock, netting (say) £990 after the dealing fee and then buying £985 of it after stamp duty (and there's bid-offer spread as well of course). I may decide to buy the same number of shares as I sold.

Also like doug2500, I do a temporary dig into instant access savings to put the money into the ISA up front, so I can do the sell and buy at the same time, and not have to wait for the cash from the sell to clear first. I then replenish the savings a few days later, from the sells.

Thank you, very helpful.

With the help of the replies provided by yourself, others and a little bit of directed research I believe I now have an idea of how to achieve my objective.

Thanks also to all who replied it was much appreciated.

[Gerry557]

Paul

Further to my reply on LSE, I think you need to identify which tax problem you are trying to resolve, CGT or dividends. Of course it might be both but then you can quantify the costs and look at which way will end up with most benefit.