Tax bill to move shares into Isas

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Savers could be hit with a surprise tax bill if they move their shares into an Isa.

The amount you can receive from tax-free dividends is being cut from £5,000 to £2,000 in April 2018.

Experts are encouraging savers to sell shares and buy them back inside an Isa — a move known as ‘Bed & Isa’ — so future dividends will be tax-free.

But doing so could leave you liable for capital gains tax, charged at up to 20 pc. CGT is due when you sell investments and make a profit of more than £11,100 in one tax year. This is rising to £11,300 next year.

In practice, someone who bought shares 30 years ago for £2,000 which are now worth £20,000 — a profit of £18,000 — would pay CGT if they moved the entire amount into an Isa this year. A charge of 20 pc would leave a bill of £3,600.

Jason Hollands of Tilney Group said: ‘If you move all your money in one go, you may come a cropper.’

Instead, move the money in stages. You have a £15,240 Isa allowance this tax year and get a fresh £20,000 allowance from April 6. Just make sure you stick to the £11,100 and £11,300 limits on profit.

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