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Hargreaves Lansdown new service helps investors into Isa tax shelter


Feb 11, 2023
Hargreaves Lansdown has launched a new service to help savers move unwrapped shares to an Isa or Sipp


Hargreaves Lansdown has launched a new Share Exchange service to help savers move their investments into an Isa or Sipp tax shelter.

Shares held outside of an Isa or Sipp are liable for dividend tax on income and capital gains tax on profits. 

But when they’re held within a Stocks and Shares Isa, they’re sheltered from tax and you don’t need to declare them on your tax return.

A looming raid will see the tax-free allowances for both capital gains and dividends slashed from the new tax year. 

Hargreaves Lansdown has launched a new service to help savers move unwrapped shares to an Isa or Sipp 'tax shelter'

Hargreaves Lansdown has launched a new service to help savers move unwrapped shares to an Isa or Sipp 'tax shelter'

Hargreaves Lansdown has launched a new service to help savers move unwrapped shares to an Isa or Sipp ‘tax shelter’

To dodge this, if you haven’t used up your Isa or Sipp allowance you can sell some of your dividend generating shares, or funds, and then rebuy them within an Isa or Sipp before the end of the tax year.

Big capital gains can also be crystallised in the same way to take advantage of this year’s allowance before the cut. 

This is known as a ‘Bed and Isa’ or ‘Bed and Sipp’ transaction and any future dividends, and capital gains, will be tax-free.

Hargreaves Lansdown says its new service will make it quicker and easier to move shares into an Isa or Sipp. 

There will be no charge for selling shares in the general investment account but there will be a charge of £11.95 to buy shares back in the Isa or Sipp. You can see how this compares in our best stocks and shares Isas and investing platforms guide. 

Married couples can also transfer shares between each other without triggering capital gains tax. Between them they can generate gains of £24,600 using this tax year’s allowance CGT free.

This is usually a fairly lengthy process because it involves selling an investment, the funds clearing and then making another investment.

Savers can sell shares held in their general investment account and move the cash into either a Stocks and Shares Isa or Sipp, as part of their annual subscription, and buy back the same shares in the Isa or Sipp.

This will be available for all UK and overseas shares, ETFs and investment trusts.

Previously, this service was entirely manual but now the Share Exchange service will be done online in two steps.

How will this work?

If you’re considering transferring some of your unwrapped shares or funds to your Isa and Sipp, make sure it’s within the current Isa and CGT allowances.

An example of how Hargreaves’ new platform will help savers:

Susannah acquired 5,000 SPC plc shares at £5.60, now £8.40, a profit of £2.80 per share. This means Susannah can share exchange 2,380 of these shares in her ISA which will use £6,664 of her £12,300 CGT allowance, and £19,992 of her ISA allowance.

Susannah can also transfer 2,380 shares to her husband Alex who can also use share exchange, using £6,664 of his £12,300 CGT allowance, and £19,992 of his ISA allowance.

The result is 4,760 of the 5,000 shares sheltered in their ISAs free from future UK income and capital gains taxes.

Tom Lee, head of trading proposition, Hargreaves Lansdown: ‘Given the cut to the capital gains tax and dividend allowances coming in April this year, the benefits of Share Exchange to shelter your investments from tax are even stronger.

‘HL’s new online service makes this quick and easy and is available on over 11,000 listed securities, and for many transactions cheaper, with no bid/offer spread, and for overseas shares, no foreign exchange charge.’

Hargreaves has said execution will be at the mid-price, meaning the client does not pay any bid/offer spread. 

This will save them an average of 0.1 per cent on FTSE 100 shares, 1.2 per cent across the FTSE All Share and 6.7 per cent of FTSE Aim shares.

The fee for holding shares in a Stocks and Shares Isa or Sipp is 0.45 per cent a year and is capped at £45 for an Isa and £200 for a Sipp.

Cliff Weight, director of ShareSoc, said:’This is a compelling offer, particularly when you realise the account fee for holding shares in their Isa is capped at £45.

‘This is another positive step from Hargreaves, coming on top of their recent voting announcement, which added another 1.75m investors to the existing ranks of this who can vote their shares online. Both are positive changes for shareholder rights.’

Earlier this week, DIY investors discovered another platform had also cut prices, with Bestinvest’s introduction of fee-free US share trading. 

Compare the best DIY investing platforms and stocks & shares Isa

Investing online is simple, cheap and can be done from your computer, tablet or phone at a time and place that suits you.

When it comes to choosing a DIY investing platform, stocks & shares Isa or a general investing account, the range of options might seem overwhelming. 

Every provider has a slightly different offering, charging more or less for trading or holding shares and giving access to a different range of stocks, funds and investment trusts. 

When weighing up the right one for you, it’s important to to look at the service that it offers, along with administration charges and dealing fees, plus any other extra costs.

To help you compare investment accounts, we’ve crunched the facts and pulled together a comprehensive guide to choosing the best and cheapest investing account for you. 

We highlight the main players in the table below but would advise doing your own research and considering the points in our full guide linked here.

>> This is Money’s full guide to the best investing platforms and Isas 

Platforms featured below are independently selected by This is Money’s specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence. 

Admin charge Charges notes Fund dealing Standard share, trust, ETF dealing Regular investing Dividend reinvestment
AJ Bell*  0.25%  Max £3.50 per month for shares, trusts, ETFs.  £1.50 £9.95 £1.50 £1.50 per deal  More details
Bestinvest* 0.40% (0.2% for ready made portfolios) Account fee cut to 0.2% for ready made investments Free £4.95 Free for funds  Free for income funds More details
Charles Stanley Direct 0.35%  No platform fee on shares if a trade in that month and annual max of £240 Free £11.50 n/a n/a More details
Fidelity* 0.35% on funds £45 fee up to £7,500. Max £45 per year for shares,  trusts,  ETFs Free £10 Free funds £1.50 shares, trusts ETFs £1.50 More details
Hargreaves Lansdown* 0.45% Capped at £45 for shares, trusts, ETFs Free £11.95 £1.50 1% (£1 min, £10 max) More details
Interactive Investor*  £9.99 per month, or £4.99 under £30k holdings,  £12.99 for Sipp £5.99 per month back in free trading credit (does not apply to £4.99 plan) £5.99 £5.99 Free £0.99 More details
iWeb £100 one-off £5 £5 n/a 2%, max £5 More details
Etoro*  Free but no Isa or Sipp  Investment account offers stocks and ETFs. Beware high risk CFDs in trading account Not available  Free  n/a  n/a  More details 
Freetrade* Free for Basic account,  £4.99 per month for Standard with Isa  Freetrade Plus with more investments and Sipp is £9.99/month inc. Isa fee No funds  Free  n/a  n/a  More details 
Vanguard  0.15%   Only Vanguard funds Free  Free only Vanguard ETFs  Free  n/a  More details 
(Source: ThisisMoney.co.uk Jan 2023. Admin % charge may be levied monthly or quarterly


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