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Shelter your existing investments from rising taxes

Use a Bed and ISA to open or top up an ISA with existing investments.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

With the government needing to raise cash to fund spending, there’s lots of noise suggesting taxes could rise.

As recently as last year, the tax-free dividend allowance was cut from £5,000 to £2,000. For anyone generating investment income outside of a tax wrapper, this change could be impacting returns.

And there’s no guarantee tax allowances of this kind won’t be cut further. In fact, this looks increasingly likely.

But there’s an easy way to start sheltering your existing investments from tax, right now. The process is called a Bed and ISA.

Learn more about Bed and ISA

How could a Bed and ISA help?

You’re not usually allowed to move investments directly into an ISA. But you can sell them, use the money raised to open or top up your ISA, and then buy back your investments. Placed as a single instruction, this process is known as a Bed and ISA.

Thousands of people take advantage every year. And it’s easy to do. If you’re placing a Bed and ISA with HL, all you need to do is tell us which investments to sell and whether you’d like to buy them back, buy something else or hold as cash while you decide where to invest.

Please remember that the value of all investments and income fall as well as rise in value, so you could get back less than you invest. Once the investments are held in an ISA, they’ll be sheltered from UK tax and the potential threat of future tax hikes. Remember tax rules can change, and the benefits of tax shelters like ISAs will depend on your individual circumstances. Selling investments outside of an ISA will count as a disposal for Capital Gains Tax purposes.

More about the benefits of a Bed and ISA

How much does a Bed and ISA cost?

It’s free to Bed and ISA funds. And the charges are the same to hold funds in an HL ISA as they are in a Fund and Share Account.

We’ll aim to place your first deal as soon as possible, usually within four working days of receipt. When buying back funds, it’s worth checking whether there’s an initial charge. There will often be a bid-offer spread – the difference between the price to buy and the price to sell a fund. Funds will be bought back at the next available valuation point. This is often the following working day, so the price is likely to move. This means you’ll have a different number of units once the Bed and ISA is completed.

To Bed and ISA shares, there’s no charge to sell your holdings and you’ll just pay up to £11.95 for each share holding repurchased online (or 1%, min £20, max £50 by post). You might also have to pay stamp duty. As with funds, there’ll also be a difference in the price at which your shares are sold and bought back. This means you’re likely to end up with a lower number of shares than originally held.

It costs 0.45% per year to hold shares in the HL Stocks and Shares ISA, capped at £45 a year.

More on our charges

Learn more about Bed and ISA

How to Bed and ISA

If you already hold investments in an HL Fund and Share Account, you can start a Bed and ISA online in minutes. This is the cheapest and quickest way of completing the process.

Don’t forget the tax year ends on 5 April. Whether you’re thinking of opening an ISA, topping up or carrying out a Bed and ISA, you don't have long left to benefit from this year’s generous £20,000 allowance. If you don’t use it, you’ll lose it.

If you want to complete a Bed and ISA in the 2018/19 tax year, we’ll need to receive your instruction soon. The following deadlines apply.

To Bed and ISA funds

By post: Wednesday 3rd April
Online: 5pm Wednesday 3rd April

To Bed and ISA shares

By post: Thursday 4th April
Online: 3pm Friday 5th April

To Bed and SIPP funds

By post: Thursday 28th March
Online: 5pm Friday 29th March

To Bed and SIPP shares

By post: Tuesday 2nd April
Online: 3pm Wednesday 3rd April

The deadline to complete a Bed and ISA or Bed and SIPP using share certificates is Thursday 21 March 2019.

Before you instruct a Bed and ISA, please read our terms and conditions (including tariff of charges) and key features.

See how to start a Bed and ISA

Remember tax rules can change and the benefits will depend on your individual circumstances. This article is not personal advice. If you’re unsure whether an investment or action is right for you, please seek advice.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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