What are Bed & ISA and Bed & SIPP and are they worth it? A two-minute explainer
Bed & ISA is a restful-sounding name for a way that shares and funds you own in a different account to be transferred into an existing ISA.
The process also exists for self-invested personal pensions, called Bed & SIPP.
Both these processes can be carried out by your broker or investment platform.
In short, your investments are sold on the open market – the ‘bed’ part of the process – then the cash is transferred into the ISA and the same investments are repurchased.
Brokers try to do this as near to simultaneously as possible to limit potential share price movement, although selling prices are generally lower than buying prices.
These processes can be a way of using your annual ISA allowance before the tax year ends on 5 April, but you will need a few days’ notice for them to be carried out.
Sometimes, investors transfer shares from their trading account to their ISA or SIPP.
Generally, there are no dealing charges for funds and no commission is charged on the sale of shares, but some platforms or brokers will apply repurchase costs.
There is no extra tax to pay on capital gains, most dividends or interest you make once you have transferred your investments.
Some investors, depending on their circumstances, may incur capital gains tax on the sale of your investment and stamp duty of 0.5%, which applies to the repurchase of all UK registered stocks.
The money needs to be in your ISA or SIPP by midnight on 5 April to count for the end of the tax year.
Story by ProactiveInvestors
Source: http://www.proactiveinvestors.com/companies/news/945510/what-are-bed--isa-and-bed--sipp-and-are-they-worth-it-a-two-minute-explainer-945510.html
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