Tax free capital gains to ISA

And to add to @kvigulis question, if we have an ISA do we still have the 12.500£ tax free allowance per year on the Invest/CFD? So, for example, could I cap my 20k ISA on a given year, then use my Invest account to invest and before the end of the fiscal year sell 12.5k worth of shares and transfer that amount to the ISA? So, lets say that the new fiscal year is on the 5th of April, if I sell 12.5k on the 4th and transfer that to my ISA, I could on the 5th/6th sell another 7.5k to top up my ISA all tax free?

The ISA cap limits deposits, once capped nothing more can go in it until the next tax year starts on April 6th.

The CGT allowance is how much you can earn in a normal account before having to pay taxes, that money can be withdrawn or reinvested without having to pay taxes on it, but it cannot be put into an ISA that is already full. you can hold it as cash until the allowance resets and only then can you deposit it into the ISA for the new tax year.

The CGT allowance is not affected by whether or not you have an ISA or its utilised deposit allocation.


before April 6th - £20k put into ISA, no more funds can be deposited.

on/after April 6th - allocation limit resets, you can now deposit that £12.5k from your investing and have £7.5k left until the next April 6th. no taxes were charged as this is in your CGT allowance.

Sorry, I just realised I explained myself wrong. My question was, do we have a total of 32.500£ tax free allowance per tax year? (12.5k Invest/CFD + 20k ISA)

No, you are allowed to deposit £20,000 in the ISA each tax year, your profits from buying and selling in the ISA are exempt from tax.
Your profits in the Invest account are subject to Capital Gains Tax (CGT), currently the first £12,300 profits from ALL capital gains are tax free.

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As @Alien says.

in your normal account that gets charged tax you have the tax free allowance which you aim to utilise fully. once that money is in the ISA it doesn’t matter if you make profits of £5k, £50k or £500k as no tax will be applied to earnings inside the ISA. In exchange there is a limit to how much you can deposit into the ISA each year. so its not as simple as adding the 2 numbers together because they represent different things.

However, utilizing your CGT allowance to fund your ISA is a good call in my opinion if you don’t need the money for anything else.

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The way you need to look at it is separate in my opinion.

In the Invest/CFD account, any gains you make a taxable, however there is a tax free allowance that applies to CGT. You can read about CGT on the website - it is very easy to understand.

ISA is separate. The 20k limit is not in terms of tax, it is in terms of deposits per tax year. You could deposit 5k, make 100k gains (don’t ask me how!) and still that is not taxable. Alternatively, you could top up the full 20k in one tax year and make 100k gains - still not taxable.

As explained above, this is not the correct way of looking at it because you are comparing a tax free allowance to a deposit allowance. Meaning the 20k is not an allowance of tax-free gains, it is the max you can deposit in a tax year. As explained above, anything you make in the ISA account is tax-free, regardless of what you deposited.

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You’re right, i did explain myself completely wrong though (both times :man_facepalming:). I understand that any CG in my ISA is free of tax no matter the gains amount. I was just wondering if i still had a CGT allowance of 12.3k per year, which i do as stated here (@Dao explained it right with the last sentence but i got confused) and in the website.

So following my case above, for people interested, i could then sell 12.3k tax free worth of stocks on my Invest on the 4th of April, leave the money there, sell another 7.7k the next day and move the 20k total of those funds to top up my ISA for the following tax year, funding my ISA through Invest gains.

Yes indeed but CGT will still be due on the 7.7k if it’s profit

The 7.7k should count as following tax year CGT allowance. So for the following year you would end up with 4.6k tax free left. Or am i missing something?

Oh I see what you were trying to do there now. It would count on the next tax year but not if you sold on April 5th like you proposed, the new tax year begins on April 6th but yes that’s the right idea otherwise

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CGT is tax on the profit not the sale value.

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