Transferring equity ISA to a cash ISA?

Is this possible?

I believe it is possible but only within the annual cash ISA investment limit of £5k.

So if you have say £20k in an equity ISA, you cannot transfer it to a £20k cash ISA. You could sell the shares and end up with £20k in a cash account of some sort but you have crystallised the capital gain there and then, and the cash is just sitting in the dealing account earning little or no interest.

Is that correct?

Reply to
Postman Pat
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Probably. I'm sure others will be along with a definitive answer.

AIUI - in recent years at any rate - you could use the whole of your annual allowance to invest in an equity ISA, but there was a lower limit for cash ISAs. I think you could always convert a cash ISA to an equity ISA but not vice versa.

If you want to 'convert' an equity ISA to a cash one, I guess - as you suggest - you've got to cash it first (which will lose its ISA status) and then re-invest it (or part of it, up to your annual limit) in a cash ISA. But (again AIUI) this will use up your current entitlement - so you can't also have another cash ISA using entirely new money in the same Tax Year.

If you have £20k in an equity ISA, can you cash just *part* of it (in order to get the cash for a cash ISA) or is it "all or nothing"?

Reply to
Roger Mills

Correct.

There's not much to worry about crystallising capital gains in ISAs - they don't count for tax purposes. Possibly they might count if you have to do a tax return abroad where they don't recognise the status of ISAs.

Theo

Reply to
Theo Markettos

Theo Markettos wrote

Yes, crystalling the CG doesn't matter in itself but surely you cannot reinvest the 20k cash back into equities of 20k, or into a cash ISA of

20k. You will need to reinvest it into equities at 10.5k per year, or into a cash ISA at 5.5k (or so) a year. So in effect you lost your ISA allowance.
Reply to
Postman Pat

If you are holding equities in your isa that are showing a CG that you want to realize then you can sell them but keep the money inside the ISA ready to reinvest when you think prices are better. Only if you withdraw the momey from the ISA wrapper do you then need to use your current annual allowance to put it back.

Tim.

Reply to
Tim Woodall

This is not a back door to a cash ISA with a higher annual investment limit, as interest on the cash is taxable at 20% and it is supposed only to be held with the intent of investing in stocks and shares.

Reply to
David Woolley

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