ISAs and temporarily moving abroad

katzen_2

I'm going to work in Austria for 8 months this coming October. Just read the Ts & Cs for an Egg Cash ISA and they say that I must inform them if I move abroad & money will then be transferred from the ISA into a bank account.

Does anyone know anything about this?
As I'm only going for a finite period of time is it worth worrying about?
Could I get away with not doing it anyway?

Thanks

dunstonh

Are you sure it says that in the T&C? Moving abroad does not mean you lose the ISAs you have already contributed to. You just cannot add to them whilst you are not resident.

Indeed, having just checked, Eggs T&C says:
You must inform us promptly in writing if you cease to be so resident or ordinarily resident or if you cease to perform such duties, or if you cease to be married to, or in a civil partnership with a Crown employee.

That is a standard requirement but it doesnt say they will transfer it out of the ISA.

katzen_2

This is the bit I was referring to.
If you move outside the UK or to the Channel Islands or the Isle of Man, you must close your Account within two months of changing your address. If you fail to close your Account within that period, we shall close your Account and will pay the money in your Account into your bank account.

katzen_2

but then furthere down it says:
If you cease to be eligible to hold your Account (for example, if you cease to be resident in the United Kingdom for tax purposes), you cannot make any further Subscriptions to the Account until you again become eligible to hold an Account. Any money retained in your Account after you become ineligible, will continue to earn gross interest at the Interest Rate.

so I think I may have just answered my question, makes more sense on mulitple readings!

Jonbvn

Since you are only going overseas for 8 months, you will still be UK resident for tax purposes AFAIK. Note you will have to pay UK tax on the money earned in Austria. Therefore, you should still be eligible to save in an ISA. However, Egg will still require a UK based address for you. Suggest you consider a suitable relative or friend's address.

katzen_2

Ok, I asked Egg and this is the response
Dear Anna

Due to the length of time you'd be abroad, unfortunately we would need to close your Egg Cash ISA. There are certain reporting requirements we have to adhere to for the FSA, and due to this we're unable to keep accounts open for customers who are abroad for a certain length of time.

If there's anything else I can do for you please feel free to get back to me.

Thanks for your message.

Regards

Lydia Morgan-Powell
Internet Customer Services

So, that's my question answered I guess

dunstonh

Transfer it from Egg to another provider then because Egg are incorrect in that response.

From HMRC: http://www.hmrc.gov.uk/leaflets/isa-factsheet.pdf

Moving abroad
You can only open an ISA if you are resident and ordinarily resident in the UK for tax purposes. If you are unsure about this, call our Centre for Non-Residents on
• 0845 070 0040 (UK) or
• 44 151 210 2222 (from abroad).

If you open an ISA and then move abroad, you are no longer classed as a UK resident. So you cannot put money into the ISA.
You can still keep your ISA open and you will still be entitled to the tax benefits on investments held in the ISA. If you become UK resident and ordinarily resident, you can start putting money in again.

Cook_County

I do not agree with dunstoh - well not exactly!

He is right that you should transfer to another provider because you can indeed keep the ISA and indeed contribute because you will still be ordinarily resident in the UK throughout your time in Austria.

However Egg are in a lather because they are worried from a regulatory perspective that if they have investors resident in another jurisdiction that this will present them with extra layers of compliance, for example the EU Savings Tax Directive. From my reading this is the problem.

You will however have to declare the ISA interest in Austria because it won't be tax-free under Austrian law no matter which provider it is invested with.

anniecave

I would tend to agree with dunstoh. If you are away for part of a tax year then you are not resident for part of that tax year but your ISA should still continue during that time. If you were away for a full tax year then you wouldn't be able to contribute for a tax year to an ISA, but as you are only away for part of a tax year then I would think you can contribute the full amount each tax year?

I would assume under reciprocal tax arrangements you will pay income tax to Austria if you are working whilst in Austria and also pay income tax here for the work you do here.

I think that Egg don't want to deal with the hassle of people not being resident so that's why they are telling you they will close it. I would therefore look to move it to somewhere else.