Transfer cash ISA

Mark1000

Dear all,

I was hoping someone could please clarify the below question for me which is probably fairly basic but I am a little rusty so please bear with me.

When one is transferring their cash ISA to another provider or considering doing this does the full amount need to be transferred? From what I have read on here it does but my dilemma is if I was to transfer over the full amount this year does that mean I cannot pay anymore in until after April when the new tax year starts?

Or

Even if I transfer over the full amount after April this year does that still mean that I couldn't pay anymore in i,e into a stocks and shares ISA as it counts towards the full amount.

Any advise much appreciated and great site too and by the way I got a great saving by using Martin's energy club:)

Regards

bowlhead99

Mark1000 wrote: »

When one is transferring their cash ISA to another provider or considering doing this does the full amount need to be transferred? From what I have read on here it does

All your 'current year contributions' of the same type (the four types are: Cash ISA; S&S ISA; IF ISA; LISA) must sit with the same provider.

So your 2019/20 tax year subscriptions must (a) all stay where they are or (b) all move together, but you are not forced to move any previous-year contributions which might be sitting in the same account at the moment. So you could ask to transfer just the current year money, or just the previous year money.

but my dilemma is if I was to transfer over the full amount this year does that mean I cannot pay anymore in until after April when the new tax year starts?

The transfer of current year contributions or previous year contributions doesn't have any effect on how much of your current year allowance you have left unused. That will remain whatever it is today (e.g. if you have subscribed £5k of new money into your ISAs so far in 2019/20, you have £15k of current year subscription allowance still unused - and the unused amount won't change just because you transferred your current year contributions from one ISA provider to another).

So you can contribute new money to wherever the rest of your '2019/20' cash ISA contributions are sitting, as long as the total amount of new money contributed to your ISAs in 2019/20 doesn't go over the £20k limit.

Even if I transfer over the full amount after April this year does that still mean that I couldn't pay anymore in i,e into a stocks and shares ISA as it counts towards the full amount.

Amounts transferred through a transfer process between ISA providers do not count as 'new money' being put into your ISA because you are not adding to the total amount of money you have in ISAs.

So doing a transfer of a partial amount or full amount from your existing ISA to another different ISA, doesn't use up any remaining allowance. Any remaining allowance can be paid into a S&S ISA if you like.

Mark1000

Dear Sir,

Thank you for taking the time to respond. I think I have understood, however, please could check that after April this year I could transfer my full cash ISA to another provider and still be able to pay in up £20k for 2020 / 2021 as it does not count as new money?

Thank you

badger09

Mark1000 wrote: »

Dear Sir,

Thank you for taking the time to respond. I think I have understood, however, please could check that after April this year I could transfer my full cash ISA to another provider and still be able to pay in up £20k for 2020 / 2021 as it does not count as new money?

Thank you

As long as you use the new ISA provider's process to make the transfer, money transferred is not 'new money', so you would still have the full £20k allowance available from 6th April 2020.

Mark1000

Dear Sir,
I would like to ask one final question if I may. If one was to transfer their ISA to an easy access account I assume that as long as one does not directly take it out all should be well?

Many thanks

eskbanker

Mark1000 said:

Dear Sir,
I would like to ask one final question if I may. If one was to transfer their ISA to an easy access account I assume that as long as one does not directly take it out all should be well?

Many thanks

As per earlier posts, ISA transfers (properly done via the new ISA provider) don't affect contribution allowances, regardless of what type of ISA is receiving the transferred funds (except Lifetime ones).  Withdrawing money from ISAs also doesn't affect contribution allowances, except if the ISA is flexible, which allows money to be redeposited later.

Not sure if that covers what you mean by 'all should be well', but if not then maybe worth rephrasing more clearly?

Mark1000

Dear Sir,
Sorry for the confusion on my part. I am trying to say removing the ISA money completely and moving to a normal account i,e non ISA the  closing the ISA down.

Many thanks 

eskbanker

Mark1000 said:

Dear Sir,
Sorry for the confusion on my part. I am trying to say removing the ISA money completely and moving to a normal account i,e non ISA the  closing the ISA down.

Many thanks 

That clarifies the starting condition for your question but still doesn't really identify exactly what you're actually asking in your earlier post?

Mark1000 said:

If one was to transfer their ISA to an easy access account I assume that as long as one does not directly take it out all should be well?

'Transfer' in the context of ISAs usually signifies transferring from one ISA to another - you can indeed withdraw money from an ISA to a non-ISA account, but this is 'directly taking it out', so it's still not clear to me what you're really getting at?

CashMoney

Maybe he's trying to say if he moves the money in ISA to an easy access saving's account will he lose any interest he's already generated on it? 

Mark1000

Hi,
Yes! sorry that is exactly what I am trying to say (sorry for my wording).

Please could someone answer that for me?

eskbanker

Interest is earned daily on savings accounts, whether they're ISAs or taxable ones - if the account is closed before the scheduled interest payment date then pro rata interest will be added to the closing balance, or if money is withdrawn without closing the account then the relevant pro rata interest will still be earned and paid out on the scheduled date.

This assumes of course that the product is no longer in any applicable fixed term, which will typically result in interest penalties (for ISAs) or prevention of access (taxable accounts).

I'm still not sure what you were getting at with "I assume that as long as one does not directly take it out all should be well?" but hopefully you now have the information you need....