Still confused about absurdly complicated ISA rules

carbonara

I have a sum of money in an instant access ISA at 3.05%, I have not paid into it in the current 12/13 tax year. I wish to move the balance of this into a Santander fixed rate ISA at 3.5% but I won't be putting any new money into the fixed rate one at the same time, just last years allowance. This is perfectly valid for this new ISA. From what I can gather from the info on this site you can do this and still be able to pay into a different ISA with this years allowance, which is what I want to do.

So I went through the application process for the fixed rate ISA and during the application process selected that I would be putting no new savings in, just a transfer. I was eventually asked to declare the following which got me scared so I didn't finish the application: -

I apply to subscribe for a Cash ISA for the tax year 2012-2013 and each subsequent year until further notice. (This doesn't commit you to paying in every year but ensures that if you do, we won't need to ask you to sign another form)
All subscriptions made, and to be made belong to me;
I am 16 years of age or over;
I have not subscribed and will not subscribe more than the overall subscription limit in total to a Cash ISA and a Stocks and Shares ISA in the same tax year;
I have not subscribed and will not subscribe more than the Cash ISA subscription limit to one Cash ISA;
I have not subscribed and will not subscribe to another Cash ISA in the same tax year as I subscribe to this Cash ISA; and

Basically it's asking me to declare that I'm subscribing this years allowance to this ISA and I won't subscribe to another one. This seems to totally contradict the information on this site and my understanding of the rules. I'm only transferring a previous years allowance so I should be free to put this years allowance wherever I like surely?

What I want to know is how can I get last years allowance into this new ISA and still carry on paying this years allowance into the ISA I'll be transferring last years allowance out of?

Does this really have to be so complicated and difficult to actually find the answer?

Mishomeister

That is something that confuses me a lot as well. I have a Halifax ISA and want to transfer it to Santander 3.3% ISA. However I don't want to put any new money in to it, but instead want to open a Nationwide 4.25% ISA as it does not allows any transfers in to it.

psychic_teabag

I had a similar problem when I phoned Santander to convert an existing ISA over to new terms. They played a recording for me to agree to in which I was agreeing to subscribe to the ISA this year, which I wasn't. But I couldn't be bothered raising it with the bloke afterwards.

Maybe the bit about "This doesn't commit you to paying in every year" is your get-out : you could say that you were able to agree to the declaration on the grounds that you didn't intend paying in this year either.

innovate

I think the confusion comes from the use of the word "subscribe", which most people would probably interpret as "apply for an ISA" or something like that. But it doesn't mean that at all - - - it means "put new money in".

It's perfectly ok to do what you want to do - you can (get Santander to) transfer your old ISA and you can open another ISA elsewhere for your 2012-2013 money. As long as you pay no new money into the Santander ISA, and all your new money into the ISA elsewhere, you are completely within the rules and within the T&Cs you sign (with both banks). An application for an ISA does not constitute your commitment to actually fund the ISA with new money.

psychic_teabag

carbonara wrote: »

I have a sum of money in an instant access ISA at 3.05%, I have not paid into it in the current 12/13 tax year. I wish to move the balance of this into a Santander fixed rate ISA at 3.5% but I won't be putting any new money into the fixed rate one at the same time, just last years allowance. This is perfectly valid for this new ISA. From what I can gather from the info on this site you can do this and still be able to pay into a different ISA with this years allowance, which is what I want to do.
...
What I want to know is how can I get last years allowance into this new ISA and still carry on paying this years allowance into the ISA I'll be transferring last years allowance out of?

Are you sure you want to do this ? Didn't the old 3.05% ISA have a bonus which has, or is about to, expire ? So you might be better off opening a new instant-access ISA for 2012/13 rather than reusing the old one. And you should be able to get better than 3.05% even if it doesn't have a bonus.

Anyway, I think you can do it if you want to : you'd probably have to specify a partial transfer of the old money, leaving £1 behind or something, since the usual thing is that the old ISA is closed after the transfer. Leaving behind £1 would ensure it stayed open.

psychic_teabag

innovate wrote: »

I think the confusion comes from the use of the word "subscribe", which most people would probably interpret as "apply for an ISA" or something like that. But it doesn't mean that at all - - - it means "put new money in".

No, the use of "subscribe" is exactly the problem. OP wants to open an ISA for transfer only. No subscriptions. But the declaration says that they are applying to subscribe to this new ISA, not just open it.

molerat

They are applying to subscribe which you can do as many times as you want, you cannot actually subscribe to more than one. All the banks are the same, don't worry, just do want you want to do. As long as you only have one ISA at any one time actually holding this year's money there is no problem. I have agreed to their silly terms twice this FY already and it is only the first day

innovate

psychic_teabag wrote: »

No, the use of "subscribe" is exactly the problem. OP wants to open an ISA for transfer only. No subscriptions. But the declaration says that they are applying to subscribe to this new ISA, not just open it.

No problem whatsoever - - you are allowed to change your mind. I.e. you "apply to subscribe (=put new money in)" but then you change your mind and don't put any new money in. There is nothing that forces you to pay in even a penny of new money - - nor do you sign that you will indeed pay new money in.

If, of course, you know at the time of application that you will not pay any new money in, and cannot reconcile those T&C words with your own conscience, you should not proceed.

psychic_teabag

So why couldn't they have just said "I am applying to open a new cash ISA..... I promise not to subscribe to more than one ISA in the same year".

carbonara

psychic_teabag wrote: »

Are you sure you want to do this ? Didn't the old 3.05% ISA have a bonus which has, or is about to, expire ? So you might be better off opening a new instant-access ISA for 2012/13 rather than reusing the old one. And you should be able to get better than 3.05% even if it doesn't have a bonus.

Anyway, I think you can do it if you want to : you'd probably have to specify a partial transfer of the old money, leaving £1 behind or something, since the usual thing is that the old ISA is closed after the transfer. Leaving behind £1 would ensure it stayed open.

It's a Northern Rock one which was withdrawn last December I think, pays 3.05% easy access with no bonus (although you made me double check that, cheers) so it seems the best option to keep that I think and use it for this years allowance.

I've never transferred an ISA before so that was going to be my next question. Will I be able to specify the amount to transfer and if I leave some in the old ISA it will stay open but if I moved the whole balance it would automatically close? Is that how it works?

innovate

carbonara wrote: »

I've never transferred an ISA before so that was going to be my next question. Will I be able to specify the amount to transfer and if I leave some in the old ISA it will stay open but if I moved the whole balance it would automatically close? Is that how it works?

All funds paid in in the current tax year must be transferred in their entirety. That's the law.

For old funds, you need to check with your old ISA provider - - most will allow partial transfers but some won't.

If you transfer the entire balance, the ISA will be automatically closed.

Note some providers also charge for transferring out - - haven't seen one of those recently but worth checking the T&Cs for such a clause.

Just to be on the safe side, since you have never done a transfer: you don't actually do it yourself, you ask your receiving ISA provider to do it. You fill in their transfer form, sign it, and let them do the rest.
Here is an example of a transfer form - they will look different from provider to provider, but essentially all ask the same sort of information.