First, you need to set up a self-select ISA. This allows you to hold and manage your own choice of shares and funds at a fairly low cost.
As a rule, you can't transfer pre-owned non-ISA shares directly into a self-select ISA. Instead, you must sell the shares and then repurchase them within the ISA - a process known as a 'share exchange', or more commonly 'Bed & ISA'. Essentially you sell your holding, move the cash into your ISA, and then repurchase the shares straightaway.
Your chosen ISA provider will be able to advise you on the process. But be aware, the process could involve fees: there could be a charge to sell the shares, and there may also be commission on the repurchase.
Before selling, you should also check that the stock you want to move is actually eligible to be held in an ISA. For details on what you can't hold see the box below. If you are not sure, check with your self-select provider before selling your stock.
The sale of your non-ISA investments may be liable for capital gains tax (CGT), which means any profit may be taxable, after taking into account your annual CGT allowance of £10,600.
However, as the total value of your shares is less than the ISA allowance it is quite likely this won't affect you - unless you have used your CGT allowance elsewhere.
What isn't allowed in an ISA?
The main things you cannot hold within a stocks and shares ISA are:
- Contracts for difference
- Covered warrants
- Physical commodities
- Government or corporate bonds with less than five years to go before redemption, or ones where the interest rate isn't fixed
- The Alternative Investment Market (AIM) is not a recognised market so most AIM-listed shares cannot be held in an ISA.
Always check with your broker if you aren't sure about the ISA status of one of your investments.