Transferring from Cash ISA account to a new Stocks & Shares ISA account

Alexis91

Hi,
I have a confusion around the ISA transfer rules. I am aware of the fact that if I transfer from a Cash ISA (to which I did pay in the current tax year) to another Stocks & Shares ISA, then I need to transfer the whole lot. If this is from a previous year's ISA (the cash was paid in in the previous tax years), then I can choose the amount of the transfer. My situation is described below:
I have an active Cash ISA account with a balance around £50k. I paid into it this year, as well as in the previous tax years. The sum I paid this year was in the region of £15k. Now I opened a new S&S ISA and want to transfer some of the funds in my Cash ISA into the new S&S ISA, which is with another provider. Since I already paid into the Cash ISA this year, does that mean my only option is to transfer the entire balance of £50k to S&S ISA (which I don't want), or can I choose to pay a part of previous year's balance in the same account (around £35k)? In short, I don't want to transfer all my ISA savings into an S&S account, but is this possible in my situation? I also do not want to sacrifice my annual ISA allowance by taking out funds manually out of my Cash ISA... Really appreciate your answers! 

eskbanker

If you've paid £35K into a cash ISA in previous years and £15K this year, you can transfer any amount of it to another ISA without falling foul of the ISA rules, although not all permutations of ISA providers will support partial transfers.

Aceace

eskbanker said:

If you've paid £35K into a cash ISA in previous years and £15K this year, you can transfer any amount of it to another ISA without falling foul of the ISA rules, although not all permutations of ISA providers will support partial transfers.

To clarify, you can transfer any amount of the £35k, but you can't split the £15k up until the new tax year starts. So, you could transfer £30k or £35k or £50k, but not £40k.

Alexland

Aceace said:
So, you could transfer £30k or £35k or £50k, but not £40k.

Esk was right OP can transfer any amount in this situation as £40k could be the whole £15k of the current tax year plus £25k from the previous tax years. The transfer form usually contains a tick box to confirm if you are transferring current year allowance so OP would need to get that right.

Aceace

Alexland said:

Aceace said:
So, you could transfer £30k or £35k or £50k, but not £40k.

Esk was right OP can transfer any amount in this situation as £40k could be the whole £15k of the current tax year plus £25k from the previous tax years. The transfer form usually contains a tick box to confirm if you are transferring current year allowance so OP would need to get that right.

Ah, OK, my bad.  I hadn't thought of that combination. Should have known better than to have doubted @eskbanker. 

Alexis91

Thank you for the responses. This clarifies the situation, so I am legally allowed to transfer only part of the previous years' earnings in my account even though I paid into it this year.
Another factor, which confused me is the transfer options available on the Vanguard website (my S&S ISA provider). It first asks when I did contribute to my ISA. Options are: 1-Current year, 2-Past years, 3- BOTH current and past years. In my case, I need to select 3. Then it says "Please note that this option allows you to transfer all of your current and previous year ISAs to Vanguard in full". In any case, I will try indicating the amount I want to transfer to the S&S ISA and also indicate how much I paid into my existing Cash ISA in the current tax year. Fingers crossed. If you had a similar experience transferring to Vanguard, please let me know.

masonic

What does it say if you select option 2? I suspect, based on the wording, Vanguard doesn't support partial transfers in the case of option 3 and will request the full balance of the cash ISA (i.e. the amount you specify is for informational purposes only).

RetSol

I suggest that you speak to the transferor and transferee institutions before proceeding.  I had a difficulty last year because the transferor would not permit a partial transfer.  As @eskbanker suggests, the institution can be more restrictive than the rules require. 

Alexis91

masonic said:

What does it say if you select option 2? I suspect, based on the wording, Vanguard doesn't support partial transfers in the case of option 3 and will request the full balance of the cash ISA (i.e. the amount you specify is for informational purposes only).

When I choose option 2, it first asks whether this is a full or a partial ISA transfer as expected. But then interestingly if I select partial transfer, then the following text appears.

"For a partial transfer the following will happen:

• Any Vanguard funds that you hold with your current provider will be transferred across as units or shares into your new account.
• Any non-Vanguard funds or cash that you hold with your current provider will not be transferred over."

@RetSol suggested.  

Alexis91

Sorry, my message was cut short for some reason
I mean, I cannot transfer any cash in option 2. There might be a catch here. Best thing is I will contact Vanguard first to double check, then perhaps also HSBC. Thank you!

masonic

Are you sure you've got cash ISA selected as the type of ISA you wish to transfer? Some providers do not accept partial transfers of other S&S ISAs, but do accept partial transfers from cash ISAs.