IFISA close/open/transfer question

simon69c · 30 January 2018 at 1:46PM

Ok so basically I kind of messed up a bit and opened an IFISA earlier this tax year but only ended up putting £100 in it to see how the provider worked. Now Funding Circle have offered me to open an IFISA with them, however I can't transfer an existing ISA into it yet. I am just trying to work out if I can open an IFISA with Funding Circle this year and if so what I would need to do with the existing IFISA I have already opened.

Can I just close the existing IFISA altogether, withdraw the £100 (plus a bit of interest) and lose out on the £100 of allowance (which wouldn't really be a big deal) and then open up the Funding Circle one?

Can I transfer the existing IFISA into a cash ISA for this year and then open a Funding Circle IFISA?

Alexland · 30 January 2018 at 3:29PM

No you can only contribute to one of each type of ISA each tax year. As such you would have to ask your new provider to transfer the IFISA from your old provider and then you can continue contributing up the the annual limits.

If you close your IFISA or transfer it to another type of ISA you will not be eligible to contribute to an IFISA again this tax year.

Another option is to wait until 6th April when the next tax year starts.

simon69c · 30 January 2018 at 4:52PM

Thanks for the reply - I suspected that may be the case. At least it's not too long to wait for the new tax year.

Plus · 31 January 2018 at 12:04PM

Technically you need to transfer everything. However HMRC have a certain amount of forgiveness if you open and then fully close an ISA in the current year. It boils down to the fact that banks only report your ISA status at the end of the year and at year-end you would only have one ongoing ISA, which looks OK from HMRC's perspective. I can't recall where it is in the guidance notes, but there's something mentioned.

So you would probably get away with it, and worst case HMRC would write to you and say 'don't do it again'.

Alexland · 31 January 2018 at 3:34PM

HMRC are continually improving their compliance monitoring (even if they cannot resource their helpdesk to even answer the phones) so I wouldn't rely on the closed ISA not being reported by the ISA Manager at the end of the tax year.

Plus · 31 January 2018 at 4:11PM

I found the bit in HMRC guidance notes:

12.32 However, where
* the investor subscribes to two cash ISAs, in the same tax year, and
* subscriptions to the first ISA subscribed to were valid, and
* all of the current year subscriptions to the first ISA subscribed to were
withdrawn (whether or not that ISA was closed) (see paragraph 12.33) before
subscriptions to the second ISA were made
the subscriptions to the second ISA may be valid (see paragraph 12.32a)

This refers to cash ISAs. It doesn't describe any means of 'self-repair' with IF ISAs.

IFISA close/open/transfer question

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free