as I understand it, the yearly 20k GBP ISA allowance pertains to paying INTO your ISA account. Does it also apply to reinvesting profit that ends up inside your ISA account?
If I hold, let’s say, 50% equity ETFs and 50% bond ETFs in my ISA account, and a sudden surge of the equities ETF means I sell some for profit that I want to invest again into my bond ETFs to get back to my 50/50 ratio, would that reinvested profit count towards my allowance if it never left the ISA account?
Over a few years you can build up a decent amount in ISAa without any concerns about capital Gains Tax. Shifting things around within the ISA wrapper is quite normal, it’s taking out and putting back you need to avoid unless you’re never investing near the limit - 20K a year now is fairly generous as a limit.
I don’t know how difficult it is to implement but you can get flexable ISAs. Apparently it’s optional and providers don’t have to offer it. Again, I don’t know what costs or complications are of doing so.
Let’s say I gave 10k on my invest account. I plan adding up approx 500 a month in various shares to build long term position. Is it to late to start with ISA? How can I move my 10k worth of shares from invest account to ISA as well as my balance?
you cannot move any shares into an ISA from outside of one period.
tax laws prevent this as all investments are taxable assets upon sale and you can only deposit funds into an ISA after all relevant taxes have been paid.
You would have to sell the shares in the invest account, use the ‘move funds’ feature to put those funds in your ISA and then re-purchase your shares. this may mean paying slightly more/less depending on the market direction for the day and general volatility. repurchasing right after selling allows you to minimise the markets influence, but there will always be some.
It’s never too late to start investing with your ISA, just make sure you have the money to cover any taxes you must pay as a result of closing your positions.
Thank you Dao, this part makes sense.
Now let’s talk year1+ scenario
Year 1 : I sell all my shares from invest, move the capital to ISA and purchase same shares ASAP. Limit is 20k funds put into ISA in a single tax year
Year 2 : I add 1.5k of funds a month to ISA, to make sure I do not exceed 20k yearly allowance.
Year 3 : Same as year 2 and so on for years to come.
Now the questions
Q1: Can I keep adding 20k funds a year to ISA so let’s say after 5 years it becomes 100k and so on or 20k in total is a limit at any given time?
Q2 : If within one year I put 20k of funds into ISA and it turns out shares double in value making it a 40k in total it is still OK for that fiscal year? Doesn’t matter how much the portfolio will grow as the ISA limit of 20k is only for the funds put in right?
correct if you want to be investing all that money. perhaps you might want to trade, in which case you could put some of the excess into the CFD account, or perhaps you can invest directly with a company or even start your own, or you may want to use those funds to improve your lifestyle or skills.