Paying into ISAs with different providers

Spadge64 · 22 March 2018 at 1:13PM

Hi fellow MSE-ers

I'm really hoping someone can help as I've exhausted all my options. I've done lots of research, am getting conflicting advice from the 2 building societies involved and have phoned the HMRC ISA helpline and they can't help, even though I'm questioning HMRC rules and regs!

I have a Loyalty Cash ISA and a Help to Buy ISA with Nationwide. They let you split your payments so you can pay into 2 'cash' ISAs, so have paid into both this tax year.

I have transferred my Help to Buy ISA to Skipton's Lifetime ISA. I wanted to transfer the full amount, but Nationwide said I can't split the current year's subscription between 2 providers and as I'd paid into my Loyalty ISA with them and would be transferring this year's contributions from my H2B ISA to Skipton, they could only transfer last year's payments to Skipton. So I've done that and left this year's payments in the H2B.

But then I've paid into my Skipton Lifetime ISA to make sure that I use this year's £4k allowance with them. Have I inadvertently broken the rules because I've paid into a Nationwide Cash ISA and my Skipton LISA in the same year? I know you are allowed to pay into a Cash ISA and LISA at the same time, as they are different types of ISAs, but I'm now not sure about the 'different providers' issue.

Not only do I need to know this for this tax year, but also for next tax year. Next tax year, I planned on contributing to all 3 (though not exceeding the 20k combined limit, obviously). But if I can't pay into 2 different providers at the same time, then I need to figure out whether to pay into the Skipton LISA (which has a £4k limit) or the ISAs I have with Nationwide (so I can utilise the full £20k allowance).

I'm so confused and feel like I'm against the clock. If anyone who understands this better than I do can advise, please do so...I'd be extremely grateful as I don't know where else to turn...feel like I'm going round in circles getting myself even more confused!

eskbanker · 22 March 2018 at 1:59PM

Spadge64 wrote: »

Have I inadvertently broken the rules because I've paid into a Nationwide Cash ISA and my Skipton LISA in the same year? I know you are allowed to pay into a Cash ISA and LISA at the same time, as they are different types of ISAs, but I'm now not sure about the 'different providers' issue.

You haven't broken any rules (and wouldn't next year either if you continued to do the same) - there is no issue with using different providers for the different types of ISA, so theoretically you could be paying into one provider's LISA, a second provider for cash ISA, a third for S&S and a fourth for IFISA, all in the same tax year.

bowlhead99 · 22 March 2018 at 3:42PM

All your current year cash ISA money is with one provider(albeit, split across two account numbers, but Nationwide will refer to it as just one big cash ISA, when discussing how many current year cash ISAs you have with HMRC). So your cash ISA has maintained its integrity.

All your current year LISA money is with one provider. So that's fine too.

Next year, you can continue to do same if you like (although, be aware Nationwide's flex regular saver pays 5% on £250pm, so just in case you are not also using that, it's a better home for new money than the HTB ISA at only £200pm and a lower interest rate).

Spadge64 · 23 March 2018 at 2:50PM

Thanks both for your replies. I feel reassured that what I've done is legitimate and what I plan to do will be allowed. I'm just confused as to Nationwide's advice that they could not transfer this year's subscriptions of my H2B ISA to Skipton's LISA. I'm going into branch this afternoon armed with your assurances to try and get an explanation that I understand!

And regarding the Nationwide Flex Regular Saver, yes I have that already and am paying into it monthly :-)

eskbanker · 23 March 2018 at 3:02PM

Just to be clear Nationwide were/are right when they "said I can't split the current year's subscription between 2 providers and as I'd paid into my Loyalty ISA with them and would be transferring this year's contributions from my H2B ISA to Skipton, they could only transfer last year's payments to Skipton".

In other words, you haven't broken any rules at the moment and won't be doing so next year, but you can't split current year contributions once they've been made, so can't transfer current year HTB money while leaving other current year cash ISA money behind in Nationwide....

GeorgeEade · 1 August 2018 at 1:02PM

I think I'm having a similar problem to OP. I have a Nationwide ISA and a Skipton LISA. This tax year I accidentally deposited the full £20k allowance into the ISA, when I meant to split it between the ISA and the LISA. Since then I've been trying to move £4k from the ISA to the LISA, but Nationwide are saying this is not allowed. What are my options now?

masonic · 1 August 2018 at 7:10PM

GeorgeEade wrote: »

I think I'm having a similar problem to OP. I have a Nationwide ISA and a Skipton LISA. This tax year I accidentally deposited the full £20k allowance into the ISA, when I meant to split it between the ISA and the LISA. Since then I've been trying to move £4k from the ISA to the LISA, but Nationwide are saying this is not allowed. What are my options now?

"ISA flexibility is available on all Nationwide cash ISAs (except our Smart Junior ISA)."

When you flexibly withdraw money that you subscribed to your cash ISA in the current tax year it is treated as if it were never paid in and you can repay it into any other type of ISA you hold. So you can simply withdraw £4k and pay it into your LISA. Confirm this with Nationwide before proceeding, but that's how ISA flexibility should work according to HMRC.

Edit: it's also exactly what Nationwide says in their FAQ here:
https://www.nationwide.co.uk/support/support-articles/faqs/isa-flexibility-faqs#xtab:what-happens-if-i-have-multiple-isas-with-nationwide

GeorgeEade · 5 August 2018 at 7:09PM

Thanks for the reply. The problem is that I'm trying to transfer between providers. My ISA is with Nationwide and my LISA is with Skipton, so I don't think Natiowide's ISA flexibility applies here.

From what I understand, you can fund two different types of ISA across two different providers within the same tax year, so normally I could just pay £16k to the Nationwide ISA and £4 to the Skipton LISA. The issue I'm having is that it seems you can't split a current year's contributions between providers once they've already been made, like @eskbanker said above.

Nationwide have told me I can move all of the current year subscriptions I made to their ISA (£20k) to the Skipton LISA, just not part of it, but that's not ideal.

Any suggestions on how I can achieve the split I'm after?

masonic · 5 August 2018 at 8:55PM

GeorgeEade wrote: »

Thanks for the reply. The problem is that I'm trying to transfer between providers. My ISA is with Nationwide and my LISA is with Skipton, so I don't think Natiowide's ISA flexibility applies here.

The key is that you don't transfer between providers. You flexibly withdraw from one (Nationwide) and pay that money into the other (Skipton).

From what I understand, you can fund two different types of ISA across two different providers within the same tax year, so normally I could just pay £16k to the Nationwide ISA and £4 to the Skipton LISA. The issue I'm having is that it seems you can't split a current year's contributions between providers once they've already been made, like @eskbanker said above.

That's incorrect. ISA flexibility allows you to remove money you've paid into an ISA during the current tax year and, as if by magic, it is treated as never having been paid in. So you can then pay it into a different type of ISA with a completely different provider should you choose. If you pay £20k into Nationwide, then flexibly remove £4k and pay that into Skipton, then it is treated identically to the situation where you just paid £16k into Nationwide to begin with.

Nationwide have told me I can move all of the current year subscriptions I made to their ISA (£20k) to the Skipton LISA, just not part of it, but that's not ideal.

It's not ideal and it's also not possible owing to the LISA limit of £4k. It does seem that the person you are speaking to at Nationwide might not be fully up to speed on what is and isn't allowed. But they are correct that if they initiate a transfer on your behalf they must transfer the current year subscriptions in full, which of course cannot be done to a LISA if you've paid in more than £4k.

Any suggestions on how I can achieve the split I'm after?

Do as suggested in my previous response.

Reed_Richards · 6 August 2018 at 9:12AM

masonic wrote: »

"ISA flexibility is available on all Nationwide cash ISAs (except our Smart Junior ISA)."

When you flexibly withdraw money that you subscribed to your cash ISA in the current tax year it is treated as if it were never paid in and you can repay it into any other type of ISA you hold. So you can simply withdraw £4k and pay it into your LISA. Confirm this with Nationwide before proceeding, but that's how ISA flexibility should work according to HMRC.

Edit: it's also exactly what Nationwide says in their FAQ here:
https://www.nationwide.co.uk/support/support-articles/faqs/isa-flexibility-faqs#xtab:what-happens-if-i-have-multiple-isas-with-nationwide

My reading of what Nationwide says is different. All the Nationwide ISAs are cash ISAs of one sort or another. So if you invest in a Nationwide cash ISA you can put money into more than one of their ISA "wrappers" and move it around. But if you withdraw ISA money from Nationwide that's a different situation completely. I doubt it can go to another ISA provider.

Gordon_the_Moron · 6 August 2018 at 9:53AM

This is a little confusing for ISA newbies. I haven't time to read the whole thread ignore this if it's been fully explained already.

You can only pay into 1 cash LISA per tax year (I'm guessing you can split the 4k LISA allowance between cash and S&S though I've not tried)

You can only pay new money into 1 stocks and shares ISA per year.

You can pay into 1 IFISA per year.

You can only pay into 1 cash ISA per year.

All of the above are separate (though the total 20k limit applies)

The issue with Nationwide is unlike Lisa, Help to Buy ISAs are not considered a different account type to cash ISA which is why you need a provider that allows splits to use one.

This leads to the stupid situation you've encountered. You can perfectly legally pay into a cash ISA for this year and LISA but you can't transfer from cash ISA to LISA (unless it's all of both accounts, cash and H2B)

If you know about it though it's a non issue as there's nothing to stop you flexibly withdrawing from Nationwide to fill the Lisa.

Paying into ISAs with different providers

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