Stocks & Shares ISA Question

RunningMan_2

Quick question (hopefully) - I have a stocks and shares ISA that I have paid £200 into in the current tax year. Is it OK to just close this ISA, open a new one elsewhere and continue contributing so long as my total contributions don't exceed the £20,000 cap (I have no other ISA investments)?

Or, do I need to do it as a transfer (I'd rather avoid this as it's a bit of a faff and I won't be going anywhere near the £20k cap anyway).

[Deleted User]

Hi,

from MSE's Isa Guide,

Current year's stocks & shares ISA. You can move ALL of this to another stocks & shares ISA or cash ISA, but you can't split it between more than one stocks & shares ISA.

So looks like you'll need to transfer.

RunningMan_2

Thanks frugalmacdugal; re-reading it that does seem to suggest as you say.

Let's try another question - if I was to close the one ISA and open another one without going anywhere near the limits what would be the likely or possible consequences?

isasmurf

RunningMan wrote: »

Thanks frugalmacdugal; re-reading it that does seem to suggest as you say.

Let's try another question - if I was to close the one ISA and open another one without going anywhere near the limits what would be the likely or possible consequences?

The second S&S ISA will be invalid, but may be "repaired" up to the combined value of subscriptions to all ISAs being below the annual allowance. This means that the second ISA will lose its tax exempt status between the date of the first subscription and HMRC issuing a notice of discovery to the ISA manager. This is not likely to be until at least 9 months after the end of the tax year to which it relates.

RunningMan_2

isasmurf wrote: »

The second S&S ISA will be invalid, but may be "repaired" up to the combined value of subscriptions to all ISAs being below the annual allowance. This means that the second ISA will lose its tax exempt status between the date of the first subscription and HMRC issuing a notice of discovery to the ISA manager. This is not likely to be until at least 9 months after the end of the tax year to which it relates.

Thanks isasmurf. Not sure I fully understand you but sounds like I'm best to go with completing the transfer.

george4064

If you know you will not be close to the ISA allowance you could sell the investments, withdraw the proceeds then deposit said proceeds into your new ISA account.

Depends if you want to be out of the market for a day or two

RunningMan_2

george4064 wrote: »

If you know you will not be close to the ISA allowance you could sell the investments, withdraw the proceeds then deposit said proceeds into your new ISA account.

Depends if you want to be out of the market for a day or two

I'd like to do this but are you sure it's allowed? It seems to conflict with what isasmurf says and also when opening the new ISA I have to accept the statement "I have not subscribed and will not subscribe to another stocks and shares ISA in the same tax year..."

george4064

RunningMan wrote: »

I'd like to do this but are you sure it's allowed? It seems to conflict with what isasmurf says and also when opening the new ISA I have to accept the statement "I have not subscribed and will not subscribe to another stocks and shares ISA in the same tax year..."

You might be right, I'm not sure now thinking about it!!

greenglide

I'd rather avoid this as it's a bit of a faff

ou fill in one form or you do it online.

No more of a faff than posting here to see if you can get around it, surely!

isasmurf

george4064 wrote: »

If you know you will not be close to the ISA allowance you could sell the investments, withdraw the proceeds then deposit said proceeds into your new ISA account.

From HMRC guidance notes for managers:
ISA investors must transfer their ISAs through the ISA manager. Investors cannot transfer an ISA by closing it and opening a new ISA with the new ISA manager (commonly known as ‘self transfer’), even if the investor is moving from one ISA product to another with the same manager.

RunningMan wrote: »

Thanks isasmurf. Not sure I fully understand you but sounds like I'm best to go with completing the transfer.

The second ISA will be invalid and be subject to income tax and CGT as if it wasn't an ISA up to the date HMRC inform the ISA provider it has repaired.

Once HMRC has discovered that you have subscribed to two ISAs of the same type and are under the allowance for the year, they will write to you to check the information. Once confirmed they will inform the ISA provider, to tell them and give a date from which the account will operate as an ISA exempt from income tax and CGT from that date onwards.

If this was a cash ISA it would be allowed the first time, but for some reason the exemption for the first self transfer doesn't apply to other ISAs.

AnotherJoe

The repurcussions for not transferring will be far more onerous than filling a form in to transfer.