Bed & ISA, ISA Wrapping - Schedule regular transfers to an ISA from an unwrapped investment (GIA, OEIC, unit trust)

ISA Wrapping - Schedule recurring Bed & ISA  (3 minutes 49 seconds)

Voyant Adviser can be used very effectively to demonstrate to clients the benefits of contributing annually to ISAs as a tax-free wrapper. One strategy for funding ISAs is through Bed & ISA.

Claire Evans demonstrates how to schedule regular transfers from an unwrapped, taxable investment account into a family’s ISAs to build up a sizable nest egg of tax free income for their future.

 

 

To schedule the regular Bed & ISA from an unwrapped investment such as an OEIC or unit trust: 

1. First, go to the Investments screen or if you are dealing with a cash ISA, go to Savings.

Note: You must have both the source and target accounts entered in the plan before you schedule this ongoing transfer. 

 

2. Select either the target account (the ISA) or the source account (the unwrapped investment). Let's take the source account for example. 

Select the account in the ledger, right.

 

3. Expand Advanced Settings > Transfers / Additional Contributions.

 

4. Select an event to schedule the beginning of the transfers - e.g. the Start event if transfers are to begin at the start of the plan.

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Tip: If you want these transfers to begin sometime in the future (in a future year of the plan), go to the Time panel to the right side of the screen, select the Event tab at the top of the panel and in the bottom-right corner of the panel, click New Event to add an event to the timeline for purposes of scheduling. Events can be added based on owner age or year. Again, this is only necessary if you don't have an event, such as Start, in the appropriate year of the timeline to begin transfers. 

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5. Select From this Account.

6. Select Future Value.

7. Amount:  Select amount and enter the amount that is to be transferred annually to the ISA.

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Tip: The transfer amount you enter might well exceed today's annual ISA contribution limit or you might even select Maximum. The software will only transfer up to the allowable annual contribution limit from the source unwrapped investment to the ISA. Anything above this limit will remain in the source unwrapped investment. 

Do bear in mind that we normally inflate ISA contribution as the plan moves into years past the known legislated limits. You will find this assumed inflation rate for the software's various tax related assumptions in Preferences > Plan Preferences (to the right side of the screen) > Default Inflation / Growth Rates > Default Tax Table Assumptions %. Understand that this assumption inflates not only ISA contribution limits but also other tax related assumptions such as the future nil rate band. Any contribution that exceeds the normal allowance would therefore be inflated in line with this assumption. 

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8. To: Select the ISA in the drop down list.

9. Timing - "Transfer before paying expenses": Tick this optional setting only if you want to ensure that the transfer is made prior to paying expenses. Normally, the software will pay expenses first, which might involve taking ad hoc withdrawals from the source account, and then transferring any funds that remain. 

10. Recur: Tick this option and select an event to schedule an end of these transfers. If transfers are to occur annually until the source unwrapped investment is depleted or the owner dies, whichever happens first, simply select Mortality. 

 

11. Click OK to close the panel 

11. Click Update or Save to save your changes. 

The same could be done from the target account, the ISA, with the obvious changes in settings.

 

Additional Notes

Transfers are not Subject to Liquidation Limits

Transfers between accounts are not subject to withdrawal limits. Even if you were to set withdrawal limit on an account (using settings on the Liquidation Limits / Draw Down Strategy panel), thereby preventing the software from taking any ad hoc withdrawals to fulfil expenses, you could still schedule one-off or recurring transfers from the account to another using the settings on the Transfers / Additional Contributions panel. Transfers between accounts are not subject to withdrawal limits and will be allowed to occur.