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Reverse cash ISA to Share ISA

agnomen
Posts: 30 Forumite


I went to the Nationwide to transfer ISA cash from a number of previous years' Santander ISA's. When I spoke to the ISA manager I told him that I wanted to transfer the money to a cash ISA; he said that cash ISAs were not worth it and I should get a Shares ISA. Although I had some doubts when he mentioned in passing (at the end) that there were charges involved, I didn't feel I could say no at the time and signed the agreement, thinking I could cancel later if I changed my mind.
When I received the paperwork and read what the charges were, and realised that if I pulled out within a couple of years I would be no better off than with a cash ISA, I cancelled.
What they now tell me, and what I didn't realise at the time was that, even though I cancelled I couldn't put the money back in a cash ISA any more. So I now have £14k I can only re-invest in a share ISA or look elsewhere.
Largely my mistake but I'm wondering if I can do anything about it. Thoughts anyone?
When I received the paperwork and read what the charges were, and realised that if I pulled out within a couple of years I would be no better off than with a cash ISA, I cancelled.
What they now tell me, and what I didn't realise at the time was that, even though I cancelled I couldn't put the money back in a cash ISA any more. So I now have £14k I can only re-invest in a share ISA or look elsewhere.
Largely my mistake but I'm wondering if I can do anything about it. Thoughts anyone?
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Comments
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Largely my mistake but I'm wondering if I can do anything about it. Thoughts anyone?
So was the transfer from Santander specified as a transfer to a Nationwide Stock and Share ISA? Or did it come across as a cash ISA.
As you invoked the cancellation rights within (?) the specified period - then it counts that the subscription to the S&S ISA was never made :-HMRC_guidance wrote:ISA managers may, in their terms and conditions, allow investors the right to cancel their cash subscription to an ISA, or packaged product within an ISA, within a set period after the receipt by the investor of the notice of the right to cancel. Provided that this period – the cancellation period - does not exceed 30 days (after the notice has been received), investors who cancel their subscription within the cancellation period are exempt from UK income and capital gains tax on any income or gains arising from the subscription in the period.
Strictly investors who withdraw their subscriptions from an ISA by exercising their right to cancel have made a subscription to an ISA. But where the subscription is cancelled within the set period, investors will be treated as though they have not subscribed to an ISA.
The problem is you can't retreat to Santander .... and you certainly don't want an S&S ISA with Nationwide - pure rubbish. So you can only ask them if they'd be willing to drop it all in a cash ISA? If the transfer came across as cash ISA transfers - then insist they drop it back into that type of ISA.If you want to test the depth of the water .........don't use both feet !0 -
So was the transfer from Santander specified as a transfer to a Nationwide Stock and Share ISA? Or did it come across as a cash ISA.
As you invoked the cancellation rights within (?) the specified period - then it counts that the subscription to the S&S ISA was never made :-
The thing is, in this case, there never was a 'subscription' to be disregarded.
Putting in new money from the current year's allowance is a 'subscription', and you are only allowed one (of each type Cash and S&S).
Transfers from previous years ISAs are not 'subscriptions'. They can (in terms of HMRC rules) be split and transfered into as many different ISAs as you lke.
But OP's problem is that moving from Cash to S&S is a one-way street.
It is a shame that Nationwide is lured by the commission and stoops to selling these horrible little Legal and General based S&S ISAs, and that it incentivises staff to promote them to its vulnerable customers.
I suggest that OP double checks with Nationwide that the money has actually been received from Santander and invested by them and that there is no reversal possible. Presuming that this will be the case then having officially cancelled, put the money into ordinary cash savings (with Nationwide) and FORMALLY COMPLAIN, and ask for compensation. Whether or not it will be sufficient I would reasonably request that this should be firstly for any losses whilst it was in briefly invested in the S&S product and then take in to account calculations for a 5 year period covering (a) any difference in rates between the Cash ISA product you wanted in the first place and the nearest (non-ISA) deposit account with similar terms they can offer instead, and (b) the taxation (at 20% or 40% of gross interest according to your personal rate) which you will now suffer. As long as personal circumstances reasonably suggest that you would have been likely to keep funds in the ISA wrapper for 5 years then I would reject offers of anything less and be willing to pursue it as far as the Financial Ombudsman Service.
Good luck.0 -
Or couldn't you trandfer the money to a better S&S ISA provider if you don't like nationwide.
XXbigman's guide to a happy life.
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Save some money0 -
It was sent as an S&S ISA.
I understand that, if the ISA manager had opted for a 7 day cancellation period, then the cash wouldn't have been sent to L&G until the 7 days was up, so it wouldn't have started down that one way street. As it was, with a 14 day period, the money was invested straight away, which is irritating since you'd think the ISA manager would have kept my options open as I'd originally asked for a cash ISA transfer. Thanks for the input.0 -
The thing is, in this case, there never was a 'subscription' to be disregarded.
A bit academic?
HMRC cover the situation where a transfer is cancelled. They also cover the situation where someone opts for an ISA product but then backs out within the cancellation period. What they don't cover is the combination effect where you transfer and then cancel the next stage ..... effectively burning your bridges.
As the OP didn't abort the transfer but did abort the subsequent activity then using 'transfer' instead of 'subscription' would have given completely the wrong picture. And given the impression he could retreat all the way to Santander - which he can't. He effectively has ISA funds on the Nationwide side of the fence which are homeless. They can't, without some sleight of hand, go back to 'cash' and they can't (above £5640 if this year's allowance is unused) go forward to 'cash'. They can only go out of Nationwide as S&S or as a cash withdrawal.If you want to test the depth of the water .........don't use both feet !0 -
A bit academic?
HMRC cover the situation where a transfer is cancelled. They also cover the situation where someone opts for an ISA product but then backs out within the cancellation period. What they don't cover is the combination effect where you transfer and then cancel the next stage ..... effectively burning your bridges.
As the OP didn't abort the transfer but did abort the subsequent activity then using 'transfer' instead of 'subscription' would have given completely the wrong picture. And given the impression he could retreat all the way to Santander - which he can't. He effectively has ISA funds on the Nationwide side of the fence which are homeless. They can't, without some sleight of hand, go back to 'cash' and they can't (above £5640 if this year's allowance is unused) go forward to 'cash'. They can only go out of Nationwide as S&S or as a cash withdrawal.
Exactly. However, part of the point of my question was to find out if there was some "sleight of hand" that would allow going back to a cash ISA. I have come to the conclusion from what's been said so far that it doesn't exist.
Or do you think otherwise Mikeyorks?0 -
Hi, sorry its a little bit off topic, but i was looking at using my full stock and shares ISA and the money is currently with Nationwide so i was just going to go for one that the financial adviser suggested. reading the above comments sounds like i dont want to do that.
Can anyone explain or suggest where else i should look, i am knew to S&S so dont know a lot yet.
thanks in advance0 -
Or do you think otherwise Mikeyorks?
I don't know the exact chronology. But as you'd confirmed it was transferred across as S&S - then I can't see a route back. Unless you face down Nationwide on the grounds of sharp practice based on their expected commission ..... and get them to treat it as a cash transfer instead. I'd give that less than 50:50 ....... but it can be done, as no one is losing out or rule breaking if they do. After all the only real bonus from moving a Cash ISA to a S&S ISA is if you do it in the current year - as it opens your cash ISA allowance up again for the current year.
I would personally transfer it out of Nationwide as a S&S ISA to somewhere like Hargreaves Lansdowne and pop it, on a DIY basis, into some Funds there (read this if you're risk averse)
http://monevator.com/vanguard-lifestrategy/
The global markets may still have some bottoming yet to do but they're already way down .... and you're likely to do far better than in cash over the longer term?If you want to test the depth of the water .........don't use both feet !0 -
reading the above comments sounds like i dont want to do that.
You really don't want to buy into any of the tied or bundled products that the Bank sell. Very expensive overall.
Have a look at one of the fund platforms such as operated by Hargreaves Lansdowne. But look elsewhere if you will be buying Shares as opposed to Funds? As they're relatively expensive for the former.If you want to test the depth of the water .........don't use both feet !0
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