Transferring Junior ISA (JISA) Whilst Resident Abroad

askelton

As a UK citizen/resident I opened a Junior ISA for our son, now 3 with Nutmeg as a way to save for his future. Since opening the account I’ve accepted a temporary position with the US parent organisation of my employer, expected to be a non UK resident for the next few years. Ensuring that I wouldn’t fall foul of any rules whilst not resident in the UK I checked the specific policies about the JISA we had, knowing we might not be able to pay into it whilst living abroad, but that the investment could sit where it was until we returned.

Since then Nutmeg has been acquired by JP Morgan Asset Management and have taken the decision to cease any accounts for customers not resident in the UK. This isn’t an issue for my wife and I’s personal holdings as we can transfer them to other investments that we have, but has left me in a challenging situation with regards to the Junior ISA.

Right now the HRMC guidance as I understand it is that the account cannot be closed and should be left as it is until we return to the UK. The HRMC guide seems to indicate that we can still add cash to their ISA, but I don’t know if that changes because we are resident abroad as well.

The HMRC guidance also states that you cannot open a new JISA whilst resident outside the UK.

I asked for clarity from Nutmeg on this issue, and their initial response was to liquidate the holdings, which, due to some issue with their system means I can’t even see it when I log into my account.

After repeatedly asking for clarity as to what was happening they have told me I need to transfer my JISA to another provider, however every provider I have spoken to have given me the same answer – that I cannot open a new JISA to transfer the money into as our son is not currently resident in the UK.

Any advice for ensuring that I don’t fall foul of any HRMC rules, whilst maintaining our son’s investments?

Thanks,

Adam

eskbanker

The scheme rules permit transfers when abroad, as per https://www.gov.uk/guidance/transfer-of-a-child-trust-fund-or-junior-isa-if-youre-an-isa-manager#transferring-a-jisa:

An account may be transferred even if - at the time that the transfer is made - the child would not be eligible for a new JISA, for example because they are no longer resident in the UK

However, that doesn't force JISA providers to accept applications from non-residents, so if you can't find one then it's a moot point.

Having said that, it doesn't seem reasonable for Nutmeg to close such accounts when there's effectively nowhere else for them to go, given all the restrictions associated with this product (which should prevent liquidation), so it might be worth going down the formal complaint route and escalating to FOS if necessary?  Normally institutions have wide-ranging rights to unilaterally close accounts but it seems to me that in this particular case it isn't as simple as that....

askelton

Thanks. That's what I'm struggling with. I've spoken to 10+ providers of JISA products and they've all told me the same thing. They can't open a new JISA or accept the incoming transfer of a JISA because we are not currently a tax resident.

xylophone

They can't open a new JISA or accept the incoming transfer of a JISA because we are not currently a tax resident.

This is  clearly not the case.

https://www.gov.uk/guidance/transfer-of-a-child-trust-fund-or-junior-isa-if-youre-an-isa-manager

An account may be transferred even if - at the time that the transfer is made - the child would not be eligible for a new JISA, for example because they are no longer resident in the UK, a crown servant or the spouse or dependant of a crown servant.

It's more a matter of won't?  This may particularly be the case where the USA is involved?

After repeatedly asking for clarity as to what was happening they have told me I need to transfer my JISA to another provider, however every provider I have spoken to have given me the same answer – that I cannot open a new JISA to transfer the money into as our son is not currently resident in the UK.

See above and https://www.tisa.uk.com/all-tisa-publications/ctf-jisa-faqs/ 

Can a parent open a JISA for their child if they (the parent) are not resident in the UK for tax purposes?

 

A: Yes, the UK residency requirement only applies to the child at the point in time that the JISA is opened.

The HRMC guide seems to indicate that we can still add cash to their ISA, but I don’t know if that changes because we are resident abroad as well.

https://thechildrensisa.com/faqs/#:~:text=What happens if we move,UK resident for tax purposes.&text=You can still keep the,continue paying money into it.

If you move abroad after already opening an account then you are not allowed to make payments into the account. You can still keep the Tax Free Junior ISA in place and it will continue to earn tax free interest and when you return to the UK you are then able to continue paying money into it. If you are in any doubt then please contact your local tax office to confirm your status and eligibility.

Again, is this a case of "this provider will not accept " rather than "the non resident is not allowed"?

See https://www.triodos.co.uk/faq/what-happens-if-i-the-child-move-abroad-am-i-still-able-to-pay-into-my-junior-cash-isa?id=d89c5ec6768a

What happens if I/ the child move abroad, am I still able to pay into my Junior Cash ISA?

Yes. As long as the child was a UK resident when the Junior cash ISA was opened, you will still be able to pay into the Junior cash ISA even though you and/or the child have moved abroad.

I wonder would Triodos accept a transfer in?  Although again, the US connection could be the deal breaker.

As for Nutmeg's stance, if you can't find a new provider, I am not at all sure that given  the special regulations for JISA and that your child is living, they can simply close  the JISA/shuffle off responsibility?

https://support.nutmeg.com/?article=360001518392-Moving-Abroad

You might need to get in touch with HMRC and ask for the query to be referred to a specialist.

The other matter to consider is the attitude of the taxation authority in the new country of residence to income arising on the JISA.

masonic

Invariably situations like this are the result of restrictions placed on an application process rather than underlying rules. People over the age of 40 who wish to transfer their S&S Lifetime ISA face the same issue. Providers generally do not account for this edge cases when programming their systems because they are only applicable to a tiny number of applications. Other than pursuing the complaints process of an individual provider on the grounds that the practice is unfair, there is little that can be done.

Alexland

askelton said:

they have told me I need to transfer my JISA to another provider

Or else what do they propose doing? By offering a JISA the provider was always taking a risk the child would move overseas and the additional compliance requirements that might come with that. Offering a JISA is an up to 18 commitment to providing the child a service so I don't see how they plan to wriggle out of this unless they can find another provider to take over the account.

masonic

Indeed, HMRC would not be very happy if they closed the account and forwarded the proceeds by cheque.