ISA - Is it allowed ??

adindas

Hi All
I have subscribed and used up all of my ISA allowances (e.g. £5640) for this tax year in “Bank A”. It is a flexible ISA where I could withdraw it anytime I want to.

In the meanwhile I also have another flexible ISA in Bank B accumulated from previous year subscription which has been reached close to certain amount. My ISA in Bank B allows transfer in. For my ISA in Bank B , I am short of a few quid to get the next tier interest rate. So what I am going to do (if it is allowed) is that I am trying to transfer about £200 from “Bank A” to my other ISA in “Bank B” to make up the different so I will be able to get higher interest rate in Bank B.

As previously mentioned, both ISA is flexible, so I will not lose any interest by doing this. My only concerned is that whether this is allowed within the ISA provision?.
Thank you for your time answering my questions.

dzug1

Yes it's allowed - provided your providers allow partial transfers

xTim

Beware of just withdrawing the money from one and putting it in yourself, as that is not allowed under the ISA rules - it would count as an additional £200 contribution for the year, taking you over your limit.

However, if Bank B accept partial transfers (watch out as occasionally a bank will only accept transfer in of all the ISA holding, not just £200 of it), then contact Bank B who usually will give you a form to fill out with your current ISA details and they will then take charge of talking with Bank A and making the transfer.

psychic_teabag

Sounds like you're proposing a partial transfer from your current ISA to an older one. You must keep all this year's subscriptions together.

EDIT: If A allows transfers in, and assuming B has more than, say, £5k in it, you could transfer £5k from B to A, and then all of this year's subscriptions from A to B, which has a net effect of moving a bit from A to B, but also makes B your current ISA. (Which doesn't matter in practise since you have already used entire allowance.)

Out of interest, why did you open a new ISA A rather than reuse B ? Is B paying higher rate ? Ah, perhaps A doesn't allow transfers ?

ghayoor

This is permissible do concerned with your specific one !!!!!

Stompa

dzug1 wrote: »

Yes it's allowed.

I don't think it is. AIUI you can only do partial transfers of previous years ISAs, if you want to transfer the current years ISA you have to transfer the whole lot.

http://www.hmrc.gov.uk/isa/transfer-isa.htm

adindas

Thank you all for your time. So far I think the opinion is mixed up. My mistake probably, to make it clear I think, I have to name the bank and product.

Bank A is “Nationwide” with “Flexclusive ISA paying 4.25 %”, I recently put that on April 10, 2012 of £5,640 so all of this year allowance.

Bank B is “NatWest with its “tiered online e-ISA” and allows transfer in from previous ISA allowance. It will pay 3.50% interest if I could have at least £30,000, So I will benefit a higher interest of 3.50% instead of just 3.25% .

Currently I am short about £200 to this minimum requirement. So if I could transfer £200 from “Flexclusive ISA in Nationwide” to online e-ISA in NatWest, I will benefit for the next tier interest rate. Is it allowed to do this?

psychic_teabag

No. You are not allowed a partial transfer from your current year's subscription. It must all stay together.

And unfortunately, you can't transfer into that nationwide ISA (as I'm sure you know).

psychic_teabag

A recent post on another thread suggests natwest are dropping rates on their e-ISA. Is this your account ?

http://forums.moneysavingexpert.com/showpost.php?p=52604217&postcount=74

thenudeone

As you would have to transfer it in full, the maths are:

Option 1: leave everything alone
Natwest £29800 @ 3.25% = £968.50
Nationwide £5640 @ 4.25% = £239.80
Total interest £1208.3

Option 2: Transfer
Natwest £29800+£5640=£35440 @ 3.5% = £1240.4

So in the current year you would be slightly better off transferring.
The extra 0.25% you earn on c. £30k more than offsets the 0.75% you lose on the £5640 you transfer

The Nationwide rate is guaranteed until Oct 2013 (as long as base rate doesn't change), whereas the Natwest rate may fall before then. However, you would probably be able to get a decent rate on £30k+ in a year's time, so it's probably still better to transfer.

adindas

psychic_teabag wrote: »

A recent post on another thread suggests natwest are dropping rates on their e-ISA. Is this your account ?

http://forums.moneysavingexpert.com/showpost.php?p=52604217&postcount=74

Thanks for reply ....
It is still paying 3.5% for the balance of £30,000+ . here is the link

http://www.natwest.com/personal/savings/g2/isas/e-isa.ashx?DCMP=ILC-PERHPSTATQ1eISARate