ISA Transfers - I'm sure they're allowed but First Direct says no!

DeenieB

I'm pretty sure from reading the threads in this forum that you are allowed to open new accounts for the purposes of transferring previous years' ISAs, but have just been told by a telephone advisor at First Direct that it's not legal!

Basically, my last two years ISA allowance has gone into a regular saver ISA with Scarborough/Skipton which is now paying 3%. I have opened a regular saver ISA for this financial year with FD paying 7%, and I'm concerned that now I have stopped paying into my Skipton ISA the interest rate will drop (I haven't checked this as I don't want to draw their attention to the fact I've stopped paying into my account!)

I therefore wanted to open a FD cash e-ISA at 3.10% to transfer in my previous two years ISAs, and this is where I have come up against the problem - the online form automatically completes with the 2009-10 tax year, and it wants you to open the account with £1. I telephoned FD to see how to get around it, and was told that they knew the rules were difficult to understand, but I wasn't allowed to open an account to pay in previous years ISAs. I could only transfer in if I opened an account for this tax year that DID accept transfers in (unlike their regular saver ISA).

To be honest, after this hassle, if I can still get 3% interest at Skipton on my old ISAs without paying in this year's ISA entitlement, I'd be happy to keep the account open... BUT I'm still really confused about the ISA rules now, having thought I'd got to grips with them!

Please can anyone help clarify things for me?

opinions4u

ISA rules allow transfers of previous year's allowances.

Individual organisations don't have to accept transfer in, or can insist on receiving the current year's ISA allowance too if they so wish.

DeenieB

Thank you for your reply. I know that some ISAs don't allow transfers in, but the FD cash e-isa does. My confusion is in the comment that it's not legal for me to both open an ISA for this years allowance and also open an account to transfer in previous years allowances (without adding any new money to it). I thought I could?

molerat

You can open as many ISA's a year as you wish. You are only allowed to subscribe new money to one. I have just opened one purely to transfer and am now looking around for this years money. Last year I opened 3. FD are obviously over complicating things, some accounts only allow you to transfer into the one you are putting new money into.

northernsparky

First Direct do allow you to open an ISA with a nil balance so you can transfer in the previous years allowance.

Whilst FD usually have ok telephone staff, they are not all as well trained as they should be.

Last tax year I opened an ISA with a nil balance and then just transfered my ISA from NS&I.

Just give them a call and ask them to look into it further - they may then get an adviser who can sort it out for you

DeenieB

Thank you for your replies. I'm relieved to hear that I did understand the rules! I wondered if FD just didn't want my previous years ISAs, but perhaps, as you say, the adviser wasn't very experienced.

I think I'll sit tight with my Skipton ISA, and try again with FD if the interest does go down now I'm not paying into it.

favemuppet

northernsparky wrote: »

First Direct do allow you to open an ISA with a nil balance so you can transfer in the previous years allowance.

I can confirm this. Opened mine in March, and now waiting for the transfer (all p/y subs) to go through.

Milarky

DeenieB wrote: »

Basically, my last two years ISA allowance has gone into a regular saver ISA with Scarborough/Skipton which is now paying 3%. I have opened a regular saver ISA for this financial year with FD paying 7%, and I'm concerned that now I have stopped paying into my Skipton ISA the interest rate will drop (I haven't checked this as I don't want to draw their attention to the fact I've stopped paying into my account!)

That's right - the 'basic' rate used to be about half if you either made more than one withdrawal annually or stopped payment monthly. You should check with 'Skipton' staff in Scarborough what the exact terms are on the account (now a 'closed issue', so cannot be checked online anymore - it could be a lot less than 1% for example) however. As it stands, you should defnitely arrange a transfer of this otherwise 'dead' ISA money and I can confirm that you were wrongly advised by FD; they will accept a transfer from 'past' years to open an account but the form they use was designed by HMRC. What the customer not intending to subscribe current year monies should do is delete or strike references to so doing. But, in fact it's even easier than that. The form merely states that you 'intend' to subscribe in the current year - it does not require you follow through by doing so. If you don't but pay the money into FD's other ISA this year instead they cannot get into trouble. Where they are tripping up is that you want to 'open' two ISAs with them in the same year, so you should only 'declare' you are subscribing on one of the two separate applications - not both of them. The problem is with the HMRC designed form - which is biased towards catching the 'new money' - but ignores the more considerable past years money in the process. It even appears that the whole forms redesign is the work/responsibility of one, single, middle-ranking HMRC official - who has taken the 'we're not here to help' message on board.

nearlyrich

I think you will find the confusion is about the type of account you want to transfer into, they will not allow you to transfer into the regular saver ISA it has to be funded from the First Account.

I am not sure they allow transfers in to the eISA they can decide whether they want to accept transfers in, I had an older FD Isa where the interest rate had dropped and they wouldn't let me move it into a 3% version so I moved that to another instution and opened last years cash ISA with FD just before the end of March.

DeenieB

Milarky wrote: »

That's right - the 'basic' rate used to be about half if you either made more than one withdrawal annually or stopped payment monthly. You should check with 'Skipton' staff in Scarborough what the exact terms are on the account (now a 'closed issue', so cannot be checked online anymore - it could be a lot less than 1% for example) however.

Aha. I did think this might be the case. I will phone Skipton after Bank Holiday and check.

I can confirm that you were wrongly advised by FD;

I thought I was, but as the adviser would not accept what I was telling him, I began to doubt myself.

What the customer not intending to subscribe current year monies should do is delete or strike references to so doing.

I will try this - thank you.

The problem is with the HMRC designed form. It even appears that the whole forms redesign is the work/responsibility of one, single, middle-ranking HMRC official - who has taken the 'we're not here to help' message on board.

LOL! Thank you so much for your help Milarky - it makes things seem a lot less daunting.

DeenieB

nearlyrich wrote: »

I think you will find the confusion is about the type of account you want to transfer into, they will not allow you to transfer into the regular saver ISA it has to be funded from the First Account.

I have managed to open a Regular Saver ISA, being an existing FD current a/c holder,

I am not sure they allow transfers in to the eISA they can decide whether they want to accept transfers in, I had an older FD Isa where the interest rate had dropped and they wouldn't let me move it into a 3% version so I moved that to another instution and opened last years cash ISA with FD just before the end of March.

This might be the case, although the adviser did tell me they would accept transfers into the cash e-ISA. He just didn't think I could open two ISAs in the same tax year, although I did tell him I only wanted to transfer two prev years ISAs into the e-ISA, with the Regular ISA being the one I wanted to subscribe to this year (blimey this is hard to explain - no wonder the adviser got confused!)