Actual ISA closure milestone 27 February 2018 at 11:57AM in ISAs & tax-free savings 9 replies 719 views

Imvrasos

I am in the process of transferring my S&S ISA into my Nationwide cash ISA. The S&S manager sent a prompt electronic fund transfer but apparently the bank's archaic process only accepts cheques, causing the transfer to remain outstanding.

My query to the forum's ISA gurus is this: when is the actual milestone of a S&S ISA closure? As my old ISA manager has liquidated my investment and sent an FPO to Nationwide, is my old ISA now considered closed, and am I free to open and fund a new S&S ISA this tax year?

Alexland

If you have contributed to a S&S ISA this tax year and transferred it into a Cash ISA then I believe you will need to wait until 6th April before you can again contribute to a S&S ISA.

Update - this was incorrect, apologies

Imvrasos

That's incorrect, you can close a current tax year ISA and transfer out to another provider, as many times as you wish. You are only limited by the rule to contribute current tax year funds to one active account only.

Alexland

Yes you can keep transferring the ISA between providers and types and contributing up to the annual limit however if you have transferred the S&S to Cash then I do not believe you can just open another S&S in the same tax year and start contributing. I understand you would need to transfer the Cash ISA back into the S&S ISA.

Update - this was incorrect, apologies

Superscrooge

That was my understanding as well. I could be wrong, but I don't believe you can contribute to more than one S&S ISA in the same tax year?

AirlieBird

If you transfer current year subscriptions from one ISA type to another, the transferred subscriptions are treated as having been made to the final ISA type. You are regarded as never having made subscriptions to the original ISA type and are free to subscribe to another of the original ISA type later in the same tax year without breaching the one ISA of each type a year rule. Only ISAs that are open at the year end or closed without transfer are reported to HMRC. ISAs that are closed by transfer are not reported to HMRC so they would never know that you had subscribed to the original ISA type before it was transferred to a different ISA type.

badger09

AirlieBird wrote: »

If you transfer current year subscriptions from one ISA type to another, the transferred subscriptions are treated as having been made to the final ISA type. You are regarded as never having made subscriptions to the original ISA type and are free to subscribe to another of the original ISA type later in the same tax year without breaching the one ISA of each type a year rule. Only ISAs that are open at the year end or closed without transfer are reported to HMRC. ISAs that are closed by transfer are not reported to HMRC so they would never know that you had subscribed to the original ISA type before it was transferred to a different ISA type.

I got sidetracked by a phone call, so AirlieBird lived up to her name.

Source here (11.12a on page 188 :eek:to save scrolling)

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/603261/ISA_Lifetime_ISA.pdf

Superscrooge

AirlieBird wrote: »

If you transfer current year subscriptions from one ISA type to another, the transferred subscriptions are treated as having been made to the final ISA type. You are regarded as never having made subscriptions to the original ISA type and are free to subscribe to another of the original ISA type later in the same tax year without breaching the one ISA of each type a year rule. Only ISAs that are open at the year end or closed without transfer are reported to HMRC. ISAs that are closed by transfer are not reported to HMRC so they would never know that you had subscribed to the original ISA type before it was transferred to a different ISA type.

Thanks. I wasn't aware of that. I learn something new everyday

Imvrasos

Now that we established that a taxpayer may open a new ISA in the same tax year, as long as the old one is absorbed and closed, can we please get back to the original query on when exactly a S&S ISA is considered closed?

The funds have left my old S&S provider, however Nationwide has not yet credited them to my cash ISA; can I now open a new S&S ISA with another provider, to fund it with 2017/18 monies, or should I wait for the money to appear in Nationwide online banking?

Alexland

Reading the ISA Managers guide (apologies I was unaware of this quirk) you would probably want to wait until you were sure the old provider has marked the account as transferred and you were sure they would not be reporting it to HMRC after the end of the tax year.