Transferring Flexible Cash ISA

njb55rtd

Virgin Money are slashing rates on their Cash ISA (which is flexible) so I'm looking elsewhere for another flexible ISA. My understanding is that when transferring, the old provider will tell the new provider whether any of the current annual allowance has been used and the amount that can still be utilised. However, I'm not 100% sure about any flexible withdrawals that have been taken within the current year. I have taken out a considerable amount during the year and was not planning to put it back in until March (when the funds will be available for me to do so).
Am I right in assuming that I would not be able to put this money back once transferred into the new provider's ISA because, if so, this requires me to stay with the old provider until then against my will and with a considerably reduced interest rate?

soulsaver

If you've got any of this years allowance left I believe you'd be able to deposit that in the transferred ISA when you're ready, but you wouldn't be allowed to deposit prior years funds that weren't in the VM ac at transfer, flexible or other wise.

If VM and your proposed new provider allow a partial transfer you could transfer just the cash that's in the VM ac leaving you a flexible availble VM balance to be funded in March?

I think if you've used 19/20 allowance and you've got £20k+ in the VM ac, you should be able to argue that includes this years allowance?

If so and the partial is allowed, then you're home & hosed on the partial transfer pari passu with cash on deposit, leaving the empty VM ISA to receive your (deemed to be) prior years' ISA cash in March.

Unless one of the MSE experts come along with more concrete knowledge I think you'll need to start with a conversation with VM.

masonic

Flexible withdrawals of money paid in during the current tax year do not need to be replaced prior to the transfer. The sum withdrawn is added back to your ISA allowance and can be used in any valid ISA before the end of the tax year.

Flexible withdrawals of money from previous tax years must be replaced prior to a transfer or the ability to replace them will be lost.

Most providers allow you to check how much allowance you have remaining from the current tax year. This must not exceed £20,000 or you will be losing the ability to replace flexibly withdrawn money.

njb55rtd

"Flexible withdrawals of money paid in during the current tax year do not need to be replaced prior to the transfer. The sum withdrawn is added back to your ISA allowance and can be used in any valid ISA before the end of the tax year".


Thanks, masonic. Do you have an official reference for this? What I have is from https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#f-isa which seems to contradict that.


"Where a flexible ISA is transferred with ‘net’ current year subscriptions of £nil the ability to replace any current year income withdrawn prior to the transfer will be lost".

masonic

njb55rtd wrote: »

Thanks, masonic. Do you have an official reference for this? What I have is from https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#f-isa which seems to contradict that.

Sure, from the same link: "Withdrawals of current year subscriptions, can effectively be replaced in any current year ISA, but cannot breach the ‘one ISA of each type per tax year’ rule."

"Where a flexible ISA is transferred with ‘net’ current year subscriptions of £nil the ability to replace any current year income withdrawn prior to the transfer will be lost".

The above is also true, if you withdraw all of your current year subscriptions, and also withdraw some interest paid, you wouldn't be able to replace that interest as it is counted as a withdrawal of previous year money.

You need to ensure only current year subscriptions are withdrawn, not also any income earned on your balance. The easiest way to ensure this is to check that your available allowance is £20,000 or less prior to initiating the transfer.