In-bank ISA transfer

ericonabike

I've opened a new A & L ISA into which i want to transfer my old A & L ISA [irritatingly they make me do this every year when the bonus dies...]. I sent off the transfer forms a couple or more weeks ago but have heard nothing. But just a thought - as I operate both accounts over the internet, and they are now both showing as live, does an electronic switch of funds between them count as a 'withdrawal'?

alastair_h

Yes I think it would, to be safe i'd complete a transfer form rather than lose you tax free status.

hethmar

I thought you couldnt transfer, but had to close one and open another?

alastair_h

No you have to open a new ISA account and transfer funds from the old provider (or account in this case) to the new account. If you close one and open another you are effectively withdrawing the funds and they lose their tax free savings status.

hethmar

Even within the same bank?

cottager

hethmar wrote: »

Even within the same bank?

Yes: as alastair_h says, you must transfer, not withdraw.

Extract from HMRC's ISA Guidance Notes for Managers, p101
http://www.hmrc.gov.uk/isa/isa-guidance-notes-2008.pdf

Internal transfers
11.1b The requirement for a transfer application applies to both internal transfers and external transfers, so this includes transfers
...
• from a cash ISA to another cash ISA with the same manager where a fresh ISA is opened (with a fresh account number)

jamesd

Even within the same bank. There's a special case for cash ISAs for the current year money only that lets you withdraw all the money from an account (including money from past years) and deposit up to this year's allowance into a new cash ISA. But this doesn't let you pay in the money from the past years. Try hard to avoid doing this, use a transfer.