ISAs transfer, maxing out and next steps

Wilde00

Hi guys,

Thanks to this forum and a lot of reading I am in a better situation compared to 8 months ago (started investing, created an emergency fund, opened a second bank account for higher interest).

However, when it comes to ISAs, I am still confused. It is my understanding that it does not matter if you have more than 1 ISA account: the important bit is not to exceed the 20.000£ yearly allocation and don’t withdraw/contribute like if it was a saving account because that will count toward the 20.000£ yearly cap.

My situation and the questions for you:
- In late march 2019 I transferred my 20k savings from the Barclays ISA to a Stock and Share ISA (Hargreaves Lansdown) and invested the total
- After April 5th and the new tax year, I opened another Barclays ISA that I currently maxed out to 20.000£

So, I now have 2 different ISAs: 1 Barclays saving ISA and 1 H&L stock&shares ISA.

Questions:
1) I assume I am ok owning 2 ISAs since I am not exceeding the 20.000£ cap?
2) Now that I maxed out Barclays ISA, if I move that money out to the H&L ISA am I still under the year cap since it’s not “additional money”? Or it will be considered 20k into Barclays ISA + 20k into H&L ISA, giving me tax issues?

As a general rule: what do you guys do once the ISA is maxed out?
I can’t invest new money in the Stock and Share ISA because I am already at the cap. Shall I wait for the next tax year, transfer the total Barclays ISA to H&L before the 5th April and then open a new Barclays ISA at the end of April with the new tax year?

I guess I am doing a strategic error here but I am not 100% sure on how this works.

Thanks to anyone that will bring clarity around this :beer:

bhjm

yes you can invest more, but not within the S&S ISA. If you should invest NOW more or later is a personal decision what probably even the best financial adviser can only answer with "at the end its your personal decision"

transferring you 2019/2020 isa - yes you should can according to
https://www.wealthsimple.com/en-gb/learn/can-you-have-multiple-isa#can_you_split_your_isa_allowance_between_two_providers


in case you have children - maybe worth to put money into their "junior ISA", creating a pension pot for the kids or put your money into a SIPP would be another option.

eskbanker

Wilde00 wrote: »

1) I assume I am ok owning 2 ISAs since I am not exceeding the 20.000£ cap?

Yes, you can own as many as you like, but are restricted to paying into no more than one of each type in any given tax year. So, if you wanted, you could pay into both a cash ISA and a S&S ISA concurrently, subject to the overall annual cap of £20K.

Wilde00 wrote: »

2) Now that I maxed out Barclays ISA, if I move that money out to the H&L ISA am I still under the year cap since it’s not “additional money”? Or it will be considered 20k into Barclays ISA + 20k into H&L ISA, giving me tax issues?

Transfers don't affect the annual allowance, as long as you use the receiving provider's transfer process rather than doing it yourself by withdrawing and redepositing.

Wilde00 wrote: »

As a general rule: what do you guys do once the ISA is maxed out?
I can’t invest new money in the Stock and Share ISA because I am already at the cap. Shall I wait for the next tax year, transfer the total Barclays ISA to H&L before the 5th April and then open a new Barclays ISA at the end of April with the new tax year?

It depends what you're looking to achieve - you can transfer from Barclays to HL this tax year or next, without affecting where you put your 2020/21 money. Current year contributions need to be kept together.

Wilde00

eskbanker wrote: »

It depends what you're looking to achieve - you can transfer from Barclays to HL this tax year or next, without affecting where you put your 2020/21 money. Current year contributions need to be kept together.

Just to confirm: do you mean that I MUST transfer the full ISA (20k), if I decide to move to H&L ISA (or anywhere else)?
And of course, using their process/modules and not by withdrawing and moving money by myself.

masonic

Wilde00 wrote: »

Just to confirm: do you mean that I MUST transfer the full ISA (20k), if I decide to move to H&L ISA (or anywhere else)?
And of course, using their process/modules and not by withdrawing and moving money by myself.

You must transfer the full £20k you paid in to Barclays during this tax year if you decide to move it to HL on or before 5th April 2020. After that time, you could transfer part of it to HL if you wished.

badger09

Wilde00 wrote: »

Just to confirm: do you mean that I MUST transfer the full ISA (20k), if I decide to move to H&L ISA (or anywhere else)?
And of course, using their process/modules and not by withdrawing and moving money by myself.

Can you please clarify why this tax year, you paid £20k into your Barclay's ISA rather than pay it into your H&L ISA?

I think:o you may be misunderstanding the £20k limit.

That limit applies to the amount of new money you can pay into ISAs each tax year. It does not mean that once the value of an ISA hits £20k you're not allowed to pay any more in.

Apologies if I'm misunderstanding you

Wilde00

badger09 wrote: »

Can you please clarify why this tax year, you paid £20k into your Barclay's ISA rather than pay it into your H&L ISA?

Hi, I guess the answer is because I am "stupid". The limit is clear and I understood the restriction.

The reasoning behind this choice was: "ISA S&S is riskier than the cash ISA, and I don't want to jeopardise 20k of savings". Looking back, I could have invested easily in the HL ISA....

masonic

masonic wrote: »

You must transfer the full £20k you paid in to Barclays during this tax year if you decide to move it to HL on or before 5th April 2020. After that time, you could transfer part of it to HL if you wished.

I forgot to mention in my answer that if you don't use the ISA transfer process, you would be able to withdraw part of the £20k you paid in to Barclays during this tax year and pay it into a S&S ISA at HL. This is because Barclays ISAs are flexible and flexibly withdrawn money from the current tax year can be replaced in an ISA of a different type.

Wilde00

masonic wrote: »

This is because Barclays ISAs are flexible and flexibly withdrawn money from the current tax year can be replaced in an ISA of a different type.

:eek: this is new to me!!

So, just to be clear: even if I maxed out already the 20k on ISA for this fiscal year (cash ISA barclays), I can withdraw any number (2-5-10k for example) and put it in my H&L Stock and Share ISA, WITHOUT exceeding the "legal" 20k allowance for this fiscal year?

This is great news!!

masonic

Wilde00 wrote: »

:eek: this is new to me!!

So, just to be clear: even if I maxed out already the 20k on ISA for this fiscal year (cash ISA barclays), I can withdraw any number (2-5-10k for example) and put it in my H&L Stock and Share ISA, WITHOUT exceeding the "legal" 20k allowance for this fiscal year?

This is great news!!

Yes, but do confirm that your specific Barclays ISA is flexible. I am just going by the list here: https://www.moneysavingexpert.com/savings/flexible-ISAs/#provider

Wilde00

masonic wrote: »

Yes, but do confirm that your specific Barclays ISA is flexible. I am just going by the list here

Update: after many calls and mobile app chat with Barclays (nobody knew the answer), finally someone from their Saving Department told me this: if you partially withdraw money from the cash ISA and put it in the investment ISA, it will adds up to the 20k allocation.

The only way is to transfer the full amount with the official modules/process. OR, I can transfer money from the previous tax year, not from this one.

I am more confused than before Reading online you find different opinions