ISA question

Hungerdunger

Aegis wrote: »

The understanding I have is that you can do a single "manual transfer" of ISA funds each tax year, where you take the funds that you have invested this year (and only this year) and withdraw them from one ISA account to deposit them in another. I may be mistaken, but I believe I saw this suggested as a loophole for someone who accidentally closed their ISA account and withdrew all their money last year. They weren't able to put the whole amount back in, but they could re-deposit that year's contribution to a new account.

Rules may have changed, my memory may be wrong, and unfortunately I can't remember who suggested it to chase up! A brief scan of HMRC's website doesn't yield anything good, so maybe I'm remembering it all wrong.

Weren't IceSave customers who withdrew ISA savings able to put them back in new ISAs? Perhaps that's what you were thinking of.

Mikeyorks

Aegis wrote: »

so maybe I'm remembering it all wrong.

Er ..... you're scrambling it a bit ..... but you're on the right lines. It's called 'self transfer' ..... HMRC say you can't do it ..... then go on to explain how you can! So it is confusing.

The scenario is that you open an ISA ... fund it (perhaps over several years) ... decide you don't fancy it ... (##) close it and take out the funds ... walk up the road and open one elsewhere .. put the money back in (##).

So long as all that (## to ##) is done in the same tax year / all the funds are withdrawn (inc any earlier years) / and you only deposit a max of £3600 on the 'new' one ............. it's OK.

So I suspect the OP is actually OK with what they have done ..... the fact they did it within the same Institution isn't the 'norm' .... but must equally be OK.

Extract from HMRC guidance here .... the Example is the easiest bit? :

12.30 ISA investors must transfer their ISAs through the ISA manager. Investors cannot transfer an ISA by closing it and opening a new ISA with the new ISA manager (commonly known as ‘self transfer’).
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
• the first ISA subscribed to 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).
12.32a The first cash ISA to be self-transferred in tax year is valid, and need not be repaired. The second (and any subsequent) self-transferred cash ISA is not valid and is not eligible for repair.
12.33 An cash ISA is closed for this purpose when all the funds held in the ISA are
withdrawn (including any subscriptions for earlier years) and no further
subscriptions are made to the ISA in the same tax year.
For Example
Mrs Cooper subscribes £3,000 to a cash ISA with Anybank plc on 20 April 2008. She closes it on 30 November 2008, then subscribes to a second cash ISA with Betterhomes Building Society on 3 December 2008. The subscriptions to the second cash ISA are valid.

Aegis

Mikeyorks wrote: »

Er ..... you're scrambling it a bit ..... but you're on the right lines. It's called 'self transfer' ..... HMRC say you can't do it ..... then go on to explain how you can! So it is confusing.

The scenario is that you open an ISA ... fund it (perhaps over several years) ... decide you don't fancy it ... (##) close it and take out the funds ... walk up the road and open one elsewhere .. put the money back in (##).

So long as all that (## to ##) is done in the same tax year / all the funds are withdrawn (inc any earlier years) / and you only deposit a max of £3600 on the 'new' one ............. it's OK.

So I suspect the OP is actually OK with what they have done ..... the fact they did it within the same Institution isn't the 'norm' .... but must equally be OK.

Extract from HMRC guidance here .... the Example is the easiest bit? :

Oh marvellous, I thought I had got it completely wrong for a while there!

Mikeyorks

Aegis wrote: »

I thought I had got it completely wrong for a while there!

No .. you were OK. But it is an odd one .... they start out saying 'you cannot' do this .... then go on to tell you the circumstances whereby you can.

Small wonder most people don't realise it's there?

Lokolo

To be fair it would confuse people who aren't as amazing as ourselves (I'm not bigheaded....)

KingL

Interesting (ish!).

Full (183 page) doc here: http://www.hmrc.gov.uk/ISA/isa-guidance-notes-2008.pdf

Lanz81

ISA providers have to send a regular report to HMRC to identify customers who have oversubscribed so the HMRC would contact the provider who would get in touch with you to state that one of your ISAs is void. they may give you the option to transfer into a Unit Trust.

Mikeyorks

Lanz81 wrote: »

one of your ISAs is void.

One is closed and - per HMRC - one :-

is valid, and need not be repaired

........... so how can it be void?