Screwed up my ISA allowance :( PLS help.

psychic_teabag

Sorry, I've never tried it myself, but a quick google turned up an hmrc page http://www.hmrc.gov.uk/isa/transfer-isa.htm

Where current year subscriptions are being transferred from a cash ISA to a stocks and shares ISA, the current year subscriptions are treated for all ISA purposes as if they had been made to the stocks and shares ISA. This means that the investor is regarded as never having subscribed to the cash ISA. Within the overall subscription limit, therefore the investor may subscribe to a cash ISA later in the current year (with the same or a different manager) without breaching the one-ISA-of-each-type-a-tax-year rule.

pqrdef

I had some doubts about this. Obviously the money transferred is wiped off the Cash ISA slate, but what about the £200 already withdrawn? Can that be "transferred" retrospectively to S&S or does it still count against the Cash allowance?

But I've allayed my doubts now. Obviously, if you transfer a current-year Cash ISA to another Cash ISA provider - no partial transfers, has to be the whole shebang - then withdrawals aren't an obstacle. So what's transferred isn't just the current balance but the entire contribution record for the year, as if all the money paid in had been paid to the new provider, including the money already withdrawn. And the old account has to be closed, or at least closed to further contributions within the year.

On this basis I reckon the scheme should work. The whole contribution record so far goes over to the S&S ISA, so none of it is an obstacle, either to changing Cash ISA provider or to paying in another £5640.

There's a niggle about whether it's mandatory to close the old account, or whether another £5640 could be paid in after the transfer. But we don't need to go there.

jimjames

I guess from the description that you would not be able to top up the S&S ISA to the full amount again as the withdrawal would be logged against that account. But in these circumstances it wouldnt matter anyway.

psychic_teabag

Well, strictly, you still have 5640 of your (total) ISA allowance, and you can choose how you distribute it between cash and S&S.

Colin297

\\\if i were to try this therefore it would entail me putting the current 5440 in S&S and then getting a further 5640?

Im sure i could transfer the 5440 straight back of sS and then lodge a full 5640 in cash again but that would be a whole lot of hassle.

what im doing, this week, is moving my balance over to post office isa.

psychic_teabag

Yeah, in your case it's probably not worth it for £200. But might be useful for others when larger sums are involved. I posted it mostly in response to #8 which said "it categorically cannot be done - trust me I'm an expert".

jimjames

Colin297 wrote: »

\\\if i were to try this therefore it would entail me putting the current 5440 in S&S and then getting a further 5640?

Im sure i could transfer the 5440 straight back of sS and then lodge a full 5640 in cash again but that would be a whole lot of hassle.

what im doing, this week, is moving my balance over to post office isa.

As outlined it is possible but whether it is worth the hassle just to get £200 extra in is debateable. All the time the money is in limbo being transferred you get no interest, virtually no interest in the S&S ISA and then while it is transfered back again. I guess that could equate to a month without interest. All to get tax free interest on £200 which is around £6 per year.

So personally I wouldn't bother but it is a very useful tip that has been highlighted by psychic teabag

psychic_teabag

jimjames wrote: »

All to get tax free interest on £200 which is around £6 per year.

Plus rates are probably lower at the moment, so closing the existing ISA and opening a new one may well give a lower rate.

In fact it's all just to get the tax on the interest of £200, which is more like £1.20 per year for a basic-rate taxpayer. You still have the £200 elsewhere, but you're having to pay tax on the interest.

Colin297

Ok, problem sorted.

I've sent off my application to open a Post Office Cash ISA with slightly over 3% interest. It should transfer the 5440 balance.

The reason ive did this is because my First Trust account was paying 0.5% since it was under 5640.

When it transfers i'll simply forget about this nice little nest egg and continue my saving. It's pretty nice knowing I've got 5.5k sitting there set aside whilst im still saving.

Next aim is to have two full ISA's (i.e next years), have a few K additional savings and be debt free. That is 18 months away but at least im on the right path.

I've only now been on a half decent salary since last September so i've did okay for my first year i guess

innovate

Good progress, Colin297 - - keep on saving :cool: