If you have funds in a General Account, you can sell some or all your holdings to reinvest them in an ISA. This process is called a Bed and ISA. You move the cash value of your investments from a taxed account to a more tax-efficient account. It's an option you might like to consider if you are not going to fund your ISA out of cash you have elsewhere.
The benefit of doing a Bed and ISA is you will not pay Capital Gains Tax on future ISA gains that you would have made in the General Account. There’s no personal income tax to pay either.
Although, selling holdings in your General Account could trigger a capital gain or loss, and there may be tax to pay. However, if any gains you make are within your personal Capital Gains Tax allowance, you may not have any tax to pay. You can learn more about the Capital Gains Tax allowance on the HMRC website.
How to do it
If you already have a Vanguard General Account and ISA, to sell your investments follow these steps
Log in to your account.
Make sure you are viewing your General Account.
From the top menu go to Portfolio Options.
Choose Sell and leave cash in your account.
Then choose what investments you would like to sell. It will take 2 to 3 working days to show as cash in your account.
When cash is available in your account
From the left-hand menu choose Payments
Go to the Money transfer tab.
Enter the account you'd like to transfer 'From' and 'To' and the amount of money to transfer and complete your transfer to an ISA.
If you already have cash in your General Account
Log in to your account.
From the left-hand menu, choose 'Payments'.
Go to the 'Money transfer' tab.
Enter the account you'd like to transfer 'From' and 'To' and the amount of money to transfer and complete your transfer to an ISA.
If you do not have an ISA
Log in to your account.
From the left-hand menu choose Open new account and follow the steps to open an ISA.
Set up a regular payment for at least £100 per month or make a single payment of at least £500 with a debit card.
Sell investments in your General Account by following the instructions above.
If you’re aiming to use the current tax year’s ISA allowance, do not leave your Bed and ISA till 5th April. Selling the existing funds in your General Account and transferring the proceeds to your Stocks and Shares ISA can take 2 to 3 working days, so it’s best to plan ahead.
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