Good option in the long run
That is a good option, but be aware you are not obliged to do it that way. You can keep both a GIA and an ISA.
You mentioned earlier you would be selling at a loss. Letās imagine you bought a share of Company A for Ā£5.00. You sell it tomorrow for Ā£4.14. When you buy it again in the ISA it can be Ā£4.08, Ā£4.27, Ā£5.02, etc, meaning nobody knows future prices. So I think the question you must ask yourself is how much you would be losing if the price action would evolve against you. Would you be loosing a couple of pounds, hundreds, thousands?
If you would risk to lose just a few quid, I guess thatās a loss worth taking given the benefits of having everything in the ISA. But if you could lose enough money to buy a plain ticket, the electricity bill or something of the sort I would suggest option b) from my previous post.
They are different in nature. And yes, you can combine both, in a very specific way due to that difference.
The GIA limitit tax free refers to a tax allowance on capital gains of up to Ā£12,300. What does this means. It means that if you buy and sell shares during the financial year, you will benefit from a tax exemption of up to Ā£12,300 on you profits. Imagine you bought Ā£2000 pounds of shares in Company A. You later sell for Ā£14k. Congratulations, youāve made a Ā£12k profit, tax free. Now imagine instead, you sold for Ā£16k. Youāve made Ā£14k profit. Of those Ā£14k, Ā£12,300 are tax free. The remainder Ā£1,700 are subject to capital gains tax, meaning you would have to pay taxes on Ā£1,700 only. Makes sense?
The ISA £20k is an entire different beast. £20k is the amount you can deposit in your ISA account for the current financial year. All the capital gains and dividends obtained within the ISA are tax free under current legislation. Please bare in mind any future government may change the rules.
So can they be combined? Absolutely. You can fund an ISA account and benefit from the tax exemptions it offers, and maintain a GIA and benefit from the capped tax allowance. But why bother having two accounts when the ISA, under current legislation, gives so much more and make life simple? It does cost £3 per month, you must not forget, but gives peace of mind. In your case, however, it might be beneficial to have both temporarily, so you could transfer your holdings either by bed & ISA; or by stop buying in the GIA and start buying in the ISA only, selling your current stocks in the GIA later, when you like the price, withdraw the money, wait for it to reach your bank account, deposit it into your ISA, and buy more shares.