Capital gains tax when transferring investments: when selling counts

Selling investments that have made gains can sometimes trigger a capital gains tax (CGT) liability, and that is true whether you sell to take the money out or sell only to move it somewhere else¹. Capital gains tax applies to shares and investment funds held outside an ISA or pension². The tax is charged on the gain, not the whole amount, and profits from the sale of investments above £3,000 are the point at which it starts to bite³.

The key distinction is between a sale and a transfer. If your holdings are sold and the proceeds passed to a new provider, that is a disposal and any gain can be taxable⁴. If the same holdings move across without being sold, there is generally nothing to tax. Investments held inside an ISA or a pension sit outside capital gains tax altogether, which is why moving money into those wrappers is worth understanding before you act⁵.

This page sets out when a transfer counts as a sale, when it does not, what you have to report, and where to get help if you are unsure.

Selling investments in a General Investment Account can trigger capital gains tax

A General Investment Account is the ordinary, taxable home for investments. Capital gains tax applies to shares and investment funds held outside an ISA or pension², and selling investments that have made gains can sometimes trigger a liability¹. The same warning appears across provider guidance: you may incur capital gains tax if you sell investments².

The tax is not confined to shares. Capital gains tax applies when you sell anything you inherited⁷, and to property that is not your home, such as buy-to-let properties, business premises, land and inherited property⁸. Personal possessions are caught too: you may have to pay capital gains tax if you make a profit when you sell a personal possession, with a £6,000 threshold on disposal proceeds⁹. Cars are excluded unless used for business⁹.

What matters for a reader moving investments is that the trigger is the disposal, not the withdrawal. A ready-made portfolio held in a general account carries the same note: capital gains tax charges will apply, depending on individual circumstances and subject to change¹⁰.

Selling to withdraw or selling to switch: both count

The reason people get caught out is that switching feels internal. It is not. Selling investments that have made gains can sometimes trigger a capital gains tax liability whether the cash leaves the account or is reinvested immediately¹.

A cash transfer makes this explicit: your investments are sold and the proceeds passed to your new provider⁴. That sale is a disposal. The fact that the money goes straight to another provider, and never reaches your bank account, does not change the tax position.

The same principle runs through employee share arrangements. If you keep your shares in a Share Incentive Plan until you sell them, you will not have to pay capital gains tax on the gain you make¹¹. Take them out and transfer them later, and the position changes: if you take the shares out of the plan and transfer them later, but within the 90-day limit, you may make a capital gain⁶. Transferring shares to someone other than a spouse or civil partner may also attract capital gains tax on any gain¹¹.

Where capital gains tax does not apply

Several wrappers and products sit outside capital gains tax, and knowing which is which is the difference between a taxable and a tax-free move.

ISAs are the clearest case. You pay no income or capital gains tax on the investments you hold in them, and you do not have to declare the ISA on your tax return¹². Individuals do not pay tax on capital gains arising on their disposals of ISA investments⁵, and money remains free from UK income tax and capital gains tax while it stays in ISAs¹³. A Lifetime ISA works the same way: no UK income tax or capital gains tax on income or capital growth, tax-free interest on cash, tax-free withdrawals, and no need to include it in a tax return¹⁴.

Gilts held directly are exempt. Investors who purchase gilts directly, rather than through a fund, do not have to pay capital gains tax on any increases in their capital value between purchase and sale or maturity¹⁵. They are exempt from capital gains tax if you sell your holding and make a profit³.

Some insurance products also sit outside the regime. Fund switches can take place without the need for tax reporting and without giving rise to capital gains tax in an onshore bond¹⁶, and any investment gains made because of switching the funds within an offshore savings account do not give rise to a UK capital gains tax liability¹⁷. Investment bonds more broadly have gains that come under income tax rules, not capital gains tax¹⁸. Venture capital trusts offer no tax on capital gains¹⁹, though shares bought on the secondary market do not attract relief on the initial investment²⁰.

Transferring without selling first

A transfer that moves the holdings themselves, rather than their cash value, is not a disposal. This is the route that avoids a capital gains tax charge, and it is worth asking a provider directly which method it uses.

Platforms are the practical setting for this. They are online services that allow you to buy, hold and sell investment trust shares²¹, and transfers between them can be done either in cash or by moving the holdings. You might be charged if you transfer investments from one platform to another, though many platforms have scrapped these fees, while others will offer to cover switching fees as an incentive to join them¹⁴. There may also be transaction fees each time you buy and sell a share, investment trust or exchange-traded fund, with fees for buying and selling traditional funds less common¹⁴.

Some providers state plainly that switching costs nothing extra. Standard Life pension transfers carry no extra costs for switching investments³. Where a switch is internal to a product that sits outside capital gains tax, such as an onshore bond, there is no tax reporting requirement either¹⁶.

Moving investments into an ISA: the sale happens first

An ISA is tax-free once the money is inside, but getting it there is the catch. If you move existing investments into an ISA, this could trigger a capital gains tax charge²². The holding has to be sold, and that sale is the disposal.

Once inside, the position is settled. If you transferred your shares to an ISA, no capital gains tax is payable on the transfer or on the later disposal of the shares in the ISA⁶. Keeping investments in an ISA means you do not have to pay any income tax on the proceeds²², and tax-efficient investments in an ISA are exempt from capital gains tax²³.

The process of selling holdings in a general account to move them into an ISA is sometimes called Bed and ISA. Selling holdings in the general account could trigger a capital gain or loss, and there may be tax to pay, though gains within the personal capital gains tax allowance may not be taxed²⁴.

There is a separate route for some employee shares. You will not pay capital gains tax on any gains you have made if you transfer Sharesave (SAYE) shares into an ISA within 90 days of the savings period ending²⁵.

Who works out the capital gains tax and how it is reported

You do. Capital gains tax is a self-assessed tax: you pay tax if you made a profit on selling or disposing of certain assets, such as shares or a second home²⁶, and a self-assessment tax return is required where you owe capital gains tax from selling assets at a profit²⁷.

How you report and pay depends on whether you sold a UK residential property²⁸. For everything else, you need details of how much you bought and sold the asset for, the dates when you took ownership and disposed of the asset, other relevant details such as costs of buying, selling or making improvements and any tax reliefs, and calculations for each capital gain or loss you report²⁸.

Some gains are reported on specialist returns. A gain on a foreign life insurance policy held by UK resident trustees should be reported in the Trust and Estate Foreign Tax Return (SA904), under gains on foreign life insurance policies, life annuities and capital redemption policies²⁹.

Rates vary by asset. The rate on gains on carried interest for individuals is 32%³⁰. For venture capital trust investors, the HS298 helpsheet explains the capital gains aspects of the VCT Scheme and helps fill in the capital gains tax summary pages of the tax return³¹.

Where to get help with capital gains tax on investments

Capital gains tax on investments is not something you have to work out alone, and free help exists.

The government's own reporting guidance sets out what you need and how to file²⁸, and the HS298 helpsheet is written for investors and explains the capital gains aspects of the VCT Scheme³¹. For anyone who has come to the UK, the tax position on arrival is set out separately²⁶.

If you want regulated help with your own circumstances, a financial adviser can look at your holdings and the order in which to move them. The cost of that advice varies, and it is worth understanding how advisers charge before you engage one. For free, impartial guidance on tax and investments more generally, MoneyHelper is the government-backed service.

Where a provider has given you poor advice or mishandled a transfer, the Financial Ombudsman Service can look at complaints about regulated firms. If a firm has failed and you have lost money, the Financial Services Compensation Scheme may be able to help, though its limits depend on the type of investment and the firm's status.