Transferring to another ISA. No longer possible? 23 January 2014 at 11:53PM edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings 15 replies 2.3K views

fdlchris

I have 2 ISAs, one with Yorkshire Bank and another with Nationwide.

The first is a 40-day notice ISA that gives a good interest rate because I need to give the said days of notice before withdrawing.

The second is an e-ISA (instant access) with Nationwide, not currently paying a good interest rate.

I would like to transfer the entire sum from the latter to the former but when I spoke to Yorkshire Bank, they said they can no longer do this. They no longer provide the option of transferring the money in from another ISA. Obviously so, with such a good interest rate.

What other way can I move the money from the Nationwide ISA to the Yorkshire Bank one?

So far, this tax year, I haven't used any of my deposit allowance into any of these ISAs and the sum in the Nationwide ISA is small enough for me to withdraw the whole sum and put it into the Yorkshire Bank ISA as this year's usage of my tax-free deposit allowance. However, if I was to withdraw the money from the Nationwide account, am I likely to incur any tax penalty on having the money on my person as I would a normal withdrawal from any other account?

Archi_Bald

From the day you withdraw money from an ISA, any interest that this money earn will become taxable. If you just withdraw it from the Nationwide ISA in order to deposit it into the YB one, you are unlikely to get any interest in the process. So you shouldn't worry about any tax penalty.

If you are certain that the YB ISA will allow further deposits and that the amount you would like to deposit is below your remaining current year allowance, your plan sounds sensible.

Might be worth double-checking against post 1 of http://forums.moneysavingexpert.com/showthread.php?t=401374 to make sure the YB ISA is your best bet. Note that a very recent drop in the Virgin ISA rates hasn't yet been reflected in that post.

fdlchris

Ok, I thought it was going to be worse than that. I've paid into ISA's for years but never withdrawn from one. I assumed if I took the money out, the building society wouldn't pay any of the interest that it had earned from the last time they did.

The last time the interest was paid on the account was in September 2013. If I withdraw all the money from the ISA, will they pay any interest what the money has earned since then up to the current date? Or will I lose it?

Vortigern

fdlchris wrote: »

The last time the interest was paid on the account was in September 2013. If I withdraw all the money from the ISA, will they pay any interest what the money has earned since then up to the current date? Or will I lose it?

If you close the account, they will pay you all interest earned up to the date of closure.

If you leave the account open, you'll have to wait till September for the interest.

badger09

Nationwide will calculate and pay interest up to the date you close the ISA account.

brewerdave

They'll pay interest up to the date of withdrawal..Looks like the 40 day notice ISA doesn't accept transfers in so you have to move the money out of the tax free environment wirh NW then make a new subscription for this tax year with YB.
HOWEVER, as far as I can see the YB 40 day notice ISA is only paying 2% for deposits over £24k -hardly earth shattering -if you don't have immediate need of the cash why not consider moving the money to a fixed rate ISA with a bank/BS that allows transfers in??

fdlchris

Thanks for the info. It helps a lot. So I will get Nationwide to close the e-ISA and transfer that to my Nationwide current account. I'll then write myself a cheque payable to my YB ISA.

I don't want a fixed term because I may be investing the money from both ISA's within the next 12-24 months into something else. I also don't find fixed ISA rates such a great deal higher than the instant access ISA's.

badger09

fdlchris wrote: »

Thanks for the info. It helps a lot. So I will get Nationwide to close the e-ISA and transfer that to my Nationwide current account. I'll then write myself a cheque payable to my YB ISA.

I don't want a fixed term because I may be investing the money from both ISA's within the next 12-24 months into something else. I also don't find fixed ISA rates such a great deal higher than the instant access ISA's.

Why do you need to write yourself a cheque? As your YB ISA is already open, can't you simply deposit by internet banking?

Archi_Bald

badger09 wrote: »

can't you simply deposit by internet banking?

Probably not because this ISA can only be managed by post or in branch. None of this new-fangled interweb stuff.

badger09

Archi_Bald wrote: »

Probably not because this ISA can only be managed by post or in branch. None of this new-fangled interweb stuff.

Oh dear.

But then it is Yorkshire we're talking about

(Married to a Yorkshireman - a man of very strongly held facts, one of which is that 'tinternet isn't to be trusted :rotfl:)

fdlchris

Yes, the ISA account is not accessible online, only via the branch.

As biased as it sounds, I'm also a Yorkshireman banking with Yorkshire Bank. However, they are the ones giving the best interest rate on such an instant(ish) cash ISA until the whole interest rate farce begins again in April when banks and building societies endeavor to allure you with their "long lasting" higher interest rate, only to watch it sharply plummet come May or June.