Advice needed on ISA transfer

foxreymann

Please advise on ISA transfer

Current situation:

I've £54.2k on flexible cash ISA with Nationwide. £20k paid this year, £34.2 from previous years.

Goal:

Move it to S&S ISA to get higher returns. But I would like to invest with a rate of £1k/week. So moving all 54.2k instantly to S&S ISA makes no sense.

I want to go with £1k/week as:
- I have no clue about investing in Funds/ETFs/Shares. I have to learn on the way.
- I want to fully diversify my invesment, so also diversify timing by drip-feeding.
- Investing £1k/week will force me to continue learning.

Questions:

- What is the best way to transfer this £54.2k into S&S ISA as slow as possible? So that I don't have to invest all the sum at once?
- I assume that S&S investment has to be an ISA as I have to avoid dividends tax. I already get dividends from my LTD company. Or am I wrong as I could keep all my S&S dividends on broker account and reinvest w/o paying any tax even outside of ISA?
- My cash ISA pays interest yearly on 30 September. Is Nationwide obliged to pay me up to date interest if I transfer out?

masonic

I suppose you could do 12 partial transfers spaced about a month apart, each would take 2-4 weeks to complete depending on your providers.

I'm not really convinced about the virtues of your £1k per week aim. You may be paying trading fees each time you buy depending on your chosen S&S ISA provider. On a £54.2k portfolio flat fee would be the most cost effective option and that usually means trading fees, but cheaper fees for monthly (not weekly) regular investing. Sufficient diversification can be obtained through just one or two funds at this level of investment.

In answer to your other questions:
2) S&S ISAs are exempt from tax on dividends, but dividends may not be significant. The other advantage is the exemption from capital gains tax which could be more significant over many years, and that there is no need to keep records for tax purposes if you hold investments in an ISA. Dividends would be taxable outside an ISA whether or they are paid out or automatically reinvested.
3) Nationwide will pay interest up to the date of your transfer, and if you do a partial transfer will continue to pay interest on the remaining balance.

foxreymann

Thank you so much Masonic. But would partial transfer be OK with all complicated ISA restriction rules? For example: "If you want to transfer money you’ve invested in an ISA during the current year, you must transfer all of it." How will the government know if I'm transferring currents year or previous years monies?

After your suggestion my idea is:

Transfer £5k to S&S ISA now ( to iWeb) and then just top it up with 20k (1k per week) in next tax year (after 6th of April). When I invest all £25k slowly transfer remaining cash ISA to the same or a different provider.

Transaction costs with iWeb are low. I just pay like £25 on account opening, and then £5 per transaction. £5 is just 0.5% of £1000. I accept this charge.

masonic

You can specify whether you want the transfer to include current year money (i.e. all of it due to the restrictions), or not. You have plenty of headroom in the previous years money to take you up to April 5th!

iWeb is a good option with straightforward pricing. It is one of two platforms I use. If you are happy to take the 0.5% hit investing £1k, then that's fair enough.

masonic

I forgot to mention, your Nationwide ISA is flexible, so you could just flexibly withdraw money (this comes out of current year money first) and pay it into your S&S ISA. No need for a formal transfer when moving current year money via flexible withdrawal to a different type of ISA.

foxreymann

One more thing. I'm really bad with trust to financial institutions. Have been fighting with ABN AMRO for my pension pot monies for 3 years when moved out of the Netherlands. 60% of pension pot contributions that I've made in Poland years ago have been stolen by Polish government. Seriously!

Hence I would like to go with multiple S&S ISA providers.

After 6th of April. Can I first invest £20k into iWeb S&S ISA. And the transfer £20k from my old cash ISA into S&S ISA with a different provider? Lets say Interactive Investor? As there is some rule that I can put monies only into one S&S ISA per year.

masonic

foxreymann wrote: »

After 6th of April. Can I first invest £20k into iWeb S&S ISA. And the transfer £20k from my old cash ISA into S&S ISA with a different provider? Lets say Interactive Investor? As there is some rule that I can put monies only into one S&S ISA per year.

Once ISA money is previous years money then it can be spread around to your heart's content. It is only current year money that is restricted to being paid into one ISA of each type.

foxreymann

Masonic, this is freaking good advice. Thank you. I was not aware that flexibility means that I can just take out £5k from this year and pay into S&S ISA with a different provider. This is amazing. I can just open iWeb account today and start investing as soon as the account is activated!!! Amazing!!!!

masonic

foxreymann wrote: »

Masonic, this is freaking good advice. Thank you. I was not aware that flexibility means that I can just take out £5k from this year and pay into S&S ISA with a different provider. This is amazing. I can just open iWeb account today and start investing as soon as the account is activated!!! Amazing!!!!

Yes, it is a really handy feature of ISA flexibility. Obviously once you've run out of current year money in the Nationwide ISA (or the tax year rolls over), you'll need to use the formal transfer process.

foxreymann

Masonic, you're freaking GREAT!!! I know what to do now. Thank you so so much!!!!

Alexland

foxreymann you get £85k of FSCS protection with S&S ISAs (although it won't cover genuine investment losses) from the 6th April so there is no need to spread this across multiple platforms.

You initial plan will incur at least £100 (0.5%) of iWeb trade fees (£5 X 20 weeks) and opening an account with Interactive Investor will be at least another £90 pa commitment. It's starting to look expensive.

Are you sure you wouldn't be better with a Halifax Share Dealing account at £12.50 fixed pa and making monthly scheduled trades at £2 each? Total £36.50 pa.

Alex