If you hold funds in a General Account you could consider selling them and reinvesting the proceeds in an ISA. This process is called a Bed and ISA. This means you're moving money from a taxed account to a more tax-efficient account. It's a good investment strategy if you are not going to fund your ISA out of cash you hold elsewhere.
The benefit of doing a Bed and ISA is that you will not pay Capital Gains Tax on future gains your investments make. There will not be any personal income tax to pay either.
Remember - 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 do not already 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.
Add at least £1.
Sell holdings in your General Account (allow 2-3 working days for cash from the sale to appear in your account).
Move money to your ISA - follow the transfer cash steps.
If you already have a Vanguard ISA
And have not reached your tax allowance. You'll need available cash to transfer – you can sell your holdings by following these steps:
Log in to your account.
From the top menu, go to 'Portfolio Options'.
Choose 'Sell' then choose your General Account.
Choose 'Sell' and choose to leave cash in your account.
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’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 time, so it’s best to plan ahead.
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