Transferring existing Stocks and Shares ISA Balance back to Cash ISA

Si__2

Hi everybody...

I have a stocks and shares ISA that has been a bit disappointing (Sterling Assurance), and I would like to transfer the balance into my Cash ISA.

If I transfer the funds directly from my Shares ISA to my Cash ISA, does it affect the years contributions allowance?

Any wisdom much appreciated!

Hooloovoo

Si_ wrote: »

I have a stocks and shares ISA that has been a bit disappointing (Sterling Assurance), and I would like to transfer the balance into my Cash ISA.

I'm afraid that is not possible. Only transfer from a cash ISA to a S&S ISA is allowed. You can't go the other way. Otherwise people could put £10k in a S&S ISA, and then immediately transfer it to a cash ISA and get around the yearly cash ISA limits.

If I transfer the funds directly from my Shares ISA to my Cash ISA, does it affect the years contributions allowance?

Yes. The only way to do it would be to take the money out of your S&S ISA and enter it as a new subscription to this years cash ISA. If the value of your S&S ISA is greater than the cash ISA limit this year, then the rest of the money will have to go elsewhere.

Si__2

Thank you, that's what I suspected!

innovate

Afraid, you cannot transfer from a S&S ISA to a cash ISA. Not something that the HMRC allows.

I don't know the details of your S&S ISA, but you would have to either sell the shares/funds in it, or close it, to realise cash. Unless you have uninvested cash sitting in there - you should be able to withdraw that any time you like.

But are you really sure you want to ditch your S&S ISA? How long have you had it? S&S ISA require a lot of patience, 5 years+ at a minimum. Having said this, I cut my losses with an ill-bought S&S ISA myself in 2006 because I couldn't see it go anywhere but south, and with hindsight, it was a good decision to get out before the whole ISA got even worse..

Assuming you have not bought any stocks/funds in this financial year in your S&S ISA, you still have your entire £5,640 annual cash ISA allowance intact.

Nearly_Old

My wife and I started with PEPs that then became S&S ISAs and as long term imvestment they have generally just followed the market - very passive investors. We did think about selling a few times but really wanted to keep within the ISA wrapper.

When I retired last year we each opened an S&S ISA account with Interactive Investors (there are lots of other similar providers). We transferred our exisitng funds but a couple of weeks ago we sold and the money is now in iii's cash car park but still within the S&S ISA wrapper - no interest is paid. At least it's been kept away from the recent falls and may stay in the car park until Greece, Germany/France, Spain, etc settle down.

Mr_K

Does seem unfair that you can't swap from shares to cash if you want. Why allow one way only ? While we're at it why can't all of your ISA allowance be in cash ? The ISA rules seem inflexible and skewed towards the investment sector. Time for that Osbourne kid to set us free to do what we want with our allowance. Some of just don't want to invest at the moment and have no confidence in the way things are going down the plughole , and prefer cash... Not been a bad choice in recent times.

rpc

Mr_K wrote: »

While we're at it why can't all of your ISA allowance be in cash ?

Presumably because a cash ISA costs HMRC significantly more than a stocks and shares ISA.

Or perhaps because no government could possibly set up a system that had simple and straightforward rules

dunstonh

Does seem unfair that you can't swap from shares to cash if you want. Why allow one way only ?

S&S ISAs have a higher ISA allowance. So, you could abuse the system if you allowed it (£11,280 into S&S ISA then transfer it to cash when cash only has half the limit). Plus the cost to the treasury is greater for cash ISAs and they don't help the economy as much.

The ISA rules seem inflexible and skewed towards the investment sector.

Which is logical given the way that investments help the economy but cash ISAs dont.

Some of just don't want to invest at the moment and have no confidence in the way things are going down the plughole , and prefer cash... Not been a bad choice in recent times.

Obviously it depends on your investments but for balanced portfolios, the returns on investments in the short term over this part of the cycle have been similar to cash.

Recessions and financial crisis happen. This is not new. It isnt the first and wont be the last. It is what happens. It's just been a longer period since the last one.

afwone

If share prices are low then that must be a good time to buy them, though it may not seem like that at the time.

That said the wisdom I have acquired is that it is generally a good idea to avoid buying funds that skim off large fees. The investment industry is there to make itself rich at the expense of its customers.

I recently transferred my cash isa of long standing into an S&S isa. In general I think I did the right thing. Even in today's market buying bonds in a S&S isa can give a much better return than you can get in a cash isa - and with less risk than with shares.