ISA Tranfers - Please can you confirm my understanding

ssm90

Hello,
Please could someone confirm my understanding of ISA transfer rules as I can not find this particular scenario online anywhere and the bank customer service team do not seem to understand me.

The Scenario-
Lets say my FIL currently has c.£50k saved in a Cash ISA from prior years with Nationwide, and this year he has subscribed the full £20k to the same Cash ISA with Nationwide bringing the total up to £70k.

He wants to TRANSFER this Cash ISA out as follows to 1)- £35k cash to a different provider (lets say Nutmeg) STOCKS&SHARES ISA and 2)- £35k to a third provider (lets say Hargeaves Lansdown) STOCKS&SHARES ISA. Obviously he will not be topping up either of these accounts for the rest of the year as his £20k allowance has been used up. Is this allowed?

The bank customer service guy says no because he says that would effectively be opening 2 ISAs in one year for the same £20k that has been transferred in this year- but my understanding is that as the £35k amount will be TRASNFERRED (including the full £20k amount from this years subscription) rather than OPENED, this should be allowed. At the end of this the Nationwide CASH ISA will be closed and the two new accounts will be open- both of which will be TRASNFERS IN.

I really hope I have explained that well.

Thanks in advance.

eskbanker

You're correct - your FIL can do what's proposed and the bank's customer service guy is typically ill-informed.  Ensure that if he goes ahead then he uses the ISA transfer processes of each of the new providers - Nationwide shouldn't be part of the conversation at all....

Having said all that, shifting out of cash into S&S with a mixture of HL and Nutmeg is quite unusual, does he have a clear rationale for what he's thinking of or were you just plucking genuinely random names out of thin air for solely illustrative purposes?

ssm90

Thanks eskbanker, yes I just plucked those names out for the illustration.
Appreciate your help

jsmith9

You can transfer your ISA, and split the transfer in any  way you wish. The only proviso is that IF you transfer any of this year's contributions you have to transfer them all.

So in your case you are free to transfer the £50k in any way amongst whatever providers you choose. The £20k must be transferred as one sum to one new provider.

ssm90

Thank you jsmith9, that was my understanding as well, the bank customer service guy scared me a little when he said it wasn't possible as I thought I would then lose the tax-free status of the funds, but thankfully that's not the case.

Thanks for confirming.