ISA - confused

churchgoer04

Hi all.

I have recently neglected my savings and have now noticed the rubbish rate I am getting on my ISA and would like to transfter it.
....
However I had previously set up a transfer into the ISA so I have used up some of this years allowance, can this ISA now be transfered into another provider providing I do not go over the yearly limit ???

jem16

churchgoer04 wrote: »

However I had previously set up a transfer into the ISA so I have used up some of this years allowance,

ISA transfers do not count towards your annual allowance.

can this ISA now be transfered into another provider providing I do not go over the yearly limit ???

Nothing stopping you transferring again.

churchgoer04

I mean I had money going into this ISA from my current account and didn't stop this at the end of the tax year. So its ok to transfer it to a better rate?

jem16

churchgoer04 wrote: »

I mean I had money going into this ISA from my current account and didn't stop this at the end of the tax year.

Ah right that kind of transfer. I throught you meant you had transferred the ISA.

So its ok to transfer it to a better rate?

Yes it is. However make sure you go through the proper transfer procdedure. That way it will not count towards your yearly allowance and you will still have the full allowance minus whatever you have already paid in this tax year.

churchgoer04

Thank you so much

Rob_192

jem16 wrote: »

Yes it is. However make sure you go through the proper transfer procdedure. That way it will not count towards your yearly allowance and you will still have the full allowance minus whatever you have already paid in this tax year.

Hang on there! If Churchgoer has paid anything into his other Isa in this current year then he won't be able to open a new Isa and pay anything further into it - you can only contribute to one provider in each year.

Churchgoer, you can certainly transfer everything, including the money already paid in this year, but if you want to make any further contributions this year, these can only be made to the Isa provider who you have already contributed to. Now, there's nothing to stop you topping up you contributions to this year's max and then thransfering it all over to a different provider, but not the other way round.

R

System

Rob_192 wrote: »

Hang on there! If Churchgoer has paid anything into his other Isa in this current year then he won't be able to open a new Isa and pay anything further into it - you can only contribute to one provider in each year.

R

Sorry to contradict you "R" but that is incorrect

You can continue to subscribe to the new ISA account to top up to the max allowance for this tax year (£5340)

See HMRC ISA Q&A

jem16

Rob_192 wrote: »

Now, there's nothing to stop you topping up you contributions to this year's max and then thransfering it all over to a different provider, but not the other way round.

R

As BAA1 has pointed out, this is incorrect.

11: Is it possible to transfer a Cash ISA to another provider part way through a tax year and is a partial balance transfer possible?

The ISA Regulations require all ISA Managers to allow you to transfer your ISA to another ISA Manager at any time, although the terms and conditions of some ISA products (e.g. term deposit accounts) may incur a penalty if the transfer request is made before the term has expired.

If subscriptions have been made to the ISA during the current tax year, the investor can make further subscriptions to the new ISA Manager after the transfer (subject to the relevant ISA subscription limits for that tax year).

Rob_192

BAA1 & jem16

Thanks for your comments, I am now somewhat confused? I had always thought it a fundamental principle that you could only make contributions to one provider per year.

BAA1 - where specifically in the HMRC Q&A that you links does it say you can transfer current year's contributions (cash Isa) to a different provider and then continue to make further payments? I have read the whole page and can't find this.

jem16 - having searched the exact words you quoted, they appear to come from a confussed.com website, are you sure they have this right? Something from HMRC would be more reasurring!

Sorry to be a pain, but I may want to do what you have advised Churchgoes if it can be done and want to make sure this is absolutely correct.

nearlyretired2004

Whilst it is true that you can transfer an ISA to a new provider at any time, as far as I'm aware you can only contribute to one provider in any tax year....... my interpretation would be that if you had started contributing to one provider you could then transfer your ISA funds to another provider, but only continue to subscribe up to your annual allowance with the first provider.


Willing to be proved wrong but it would have to come from HMRC website!

System

I understand where you are coming from. I wanted to post a link to the HMRC site so that the info came from the horses mouth - so to speak. But I found it difficult to find a specific example that applied to a straight forward Cash ISA.

The HMRC ISA info tends to complicate matters by combining Cash and Stocks & Shares ISAs which I would have thought were in the minority and they should have given more examples for simple Cash ISAs.

However, there is a long document which may help (although it still confuses with Stocks & Shares) and as usual with most official documents produced by the government and/or HMRC the information is not always clear or unambiguous.

See section 11.20 paragraph 3 and 11.21 of : HMRC Guidance Notes for ISA Managers

If the words in square brackets are deleted, the Transfer Application is simply a
request to transfer an ISA. This would be applicable where the investor does not
intend to subscribe to the new manager after the transfer (in which case the
application does not have to be signed by the investor but can be signed by
someone authorised to sign on their behalf, for example under a Power of
Attorney). Should the investor subsequently decide to subscribe to the new
manager, a standard application form must be completed.

11.21 If the words in square brackets are not deleted, the Transfer Application is both a
request to transfer an ISA and an application to subscribe to the new manager.
This would be applicable where the investor intends to subscribe to the new
manager after the transfer. In that case the Transfer Application would be valid for
• subscriptions made in the year of transfer, and
• subscriptions made in each successive year following the year of transfer, in
which the applicant subscribes to the ISA.

So, the inference is that if you sign the transfer document, you are declaring that you intend to subscribe to the new ISA and you have confirmed that it is the only ISA with new money in the current tax year.

The guidance notes also go into detail of what info the old ISA manager should report during a transfer and this includes the amount that has been subscribed in the current tax year. ( I infer from this that they are informing the new ISA manager (and HMRC) how much has already been subscribed so that the account can be topped up to the max for the current year.

And, from a logical reasoning perspective, why would HMRC or the government want to apply a rule which impacted negatively on a saver. To restrict savers to one ISA provider each year would leave the ISA provider a way to offer a high initial interest rate, then simply drop the rate once the account was opened knowing that the investor could not move their money to a better provider - this would kill any chance of competition in the ISA market.

If I find any other links that are more applicable then I will post again.

P.S.
Once you have transfered all of this years subscriptions, the old account has to be closed so that you can only subscribe to one provider in the current tax year. (Although again, finding a clear statement about this from HMRC has not been possible - yet)