What is a General Investment Account (GIA)?
Published / Last Updated on 10/05/2023
Think of a General Investment Account (GIA) as a ‘stocks and shares’ Individual Savings Account (ISA) but without the tax breaks.
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Individual Savings Account (ISA) |
General Investment Account (GIA) |
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Invests in |
Cash, property, government bonds, corporate bonds, directly held stocks and shares, collective ‘stocks and shares’ investment funds such as unit trusts, investment trusts and open-ended investment companies (OEICS) |
Cash, property, government bonds, corporate bonds, directly held stocks and shares, collective ‘stocks and shares’ investment funds such as unit trusts, investment trusts and open-ended investment companies (OEICS) |
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Income Tax on Dividends |
Tax Free |
Taxed at 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers and 39.35% for additional rate taxpayers for dividend income more than the dividend allowance currently £1,000 pa (2023/24) and £500 (2024/25) |
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Capital Gains Tax on transfer, sale, disposal, cash in |
Tax Free |
Taxed at 10% for basic rate taxpayers and 20% for higher rate taxpayers and additional rate taxpayers for any gains more than the capital gains tax allowance currently £6,000pa (2023/24) and £3,000 pa (2024/25) |
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Annual Investment Limit |
£20,000 adult ISA allowance |
No limit |
Interaction between ISAs and GIAs
Your GIA usually sits alongside your ISA on an investment platform and investments usually mirror each others investment portfolio. Each new tax year, you sell/cash in say £20,000 of your GIA account. Ideally, any gains made by this encashment should only be up to your capital gains tax annual allowance, currently £6,000 meaning no capital gains tax. Overnight this is transferred into your ISA account using up your ISA allowance for that tax year. This is called a ‘Bed and ISA’. The objective being to invest in similar funds and ideally benefit from growth and gradually all your GIA will move across to your ISA over the coming years meaning you use up your capital gains tax allowance and eventually get all your taxable GIA into your tax-free ISA.
Bed and ISA 30 Day Rule
Under capital gains tax rules, you cannot sell and buy back the same investment at the same trading price next day and must wait 30 days to buy back the same investment in your ISA that was held in your GIA, so it is not quite an overnight transaction if you want to invest in the same thing and you may buy back after 30 days at slightly different price. Any loss or gain is outweighed by the fact that your funds are now in a tax-free ISA. You can of course, invest immediately in the same investments but via a different product e.g., a self invested personal pension which will then attract tax-relief assuming you are still eligible to pay into a pension.
