Why can't this be done?

NH2004

bigfreddiel wrote: »

I'll tell you whats wrong with thw above - never ever WITHDRAW money froman ISA - TRANSFER IT - your mate has just lost 10k of money that could earn interest tax free,
fj

I know in general this would be true, but in his case he would lose nothing.

He had £10000 in an old ISA paying 0.5% interest.
By doing what he proposed he would have the full £10k in a 3.3% interest ISA, therefore he has not lost his £10K of tax free savings.

bigfreddiel

NH2004 wrote: »

I know in general this would be true, but in his case he would lose nothing.

He had £10000 in an old ISA paying 0.5% interest.
By doing what he proposed he would have the full £10k in a 3.3% interest ISA, therefore he has not lost his £10K of tax free savings.

but he's used £4900 of this years alowance when he had no need to if he had transferred,

fj

zzzLazyDaisy

I think the point that the previous poster is making is that by withdrawing the cash and re-investing your friend has lost that earlier isa allowance which he can never get back, whereas by transferring, he would still have had last year's isa allowance and this year's, to increase his tax free savings. But of course that is only an issue if he would otherwise have had further money to save into a new ISA.

NH2004

bigfreddiel wrote: »

but he's used £4900 of this years alowance when he had no need to if he had transferred,

Yes he knows that, but as I said in the opening post, he knows he would not have any extra savings to add to it this year, so he would lose nothing by using up this year's allowance in this way.

So for his particular circumstances it was a way that he could move all of his ISA savings into the Flexible 3.3% ISA(the best paying instant access ISA available). This particular ISA does not allow transfers in, so the money could not be transferred.

AirlieBird

There's nothing wrong with the suggestion and, in my opinion, Santander should not have stopped him from doing this. I think the problem here is the amount of money proposing to be withdrawn and redeposited in separate accounts will trigger an anti-money laundering check that is required to be carried out by law.

GingerFurball_2

Presumably the audit would be to ensure your mate isn't money laundering?

Surely most banks would have some sort of process which kicks in if someone just turns up with £10k to invest?

NH2004

But the money was only being transferred between Santander accounts.

I can appreciate that some sort of audit or check may take place, but still see no reason why what he proposed to do wasn't legal.

At worse it may have delayed the transfer, but at the time he had about one month before the ISA deadline.

ses6jwg

He is talking out of his backside it won't trigger an audit at all.