cash ISA transfer as an expat 28 November 2022 at 2:21PM in ISAs & tax-free savings 9 replies 136 views

CKic

My daughter has a cash ISA account before leaving UK to work abroad a year ago. She would like to move her cash ISA saving to another provider. However, most of the high street banks required her to be a UK resident for opening a cash ISA account even they accept ISA transfer. The HMRC website clearly stated that expats are allowed to move their cash ISA to another providers. I would like to know if there is any such provider offering a descent saving rate. 

eskbanker

CKic said:

The HMRC website clearly stated that expats are allowed to move their cash ISA to another providers.

But that only means they can transfer money between existing ISAs, not that they can open new ones.

CKic said:

However, most of the high street banks required her to be a UK resident for opening a cash ISA account even they accept ISA transfer.

Most?  Surely 'all' (subject to the exception below)?

Who can open an ISA

[...]

You must also be either:

• resident in the UK
• a Crown servant (for example diplomatic or overseas civil service) or their spouse or civil partner if you do not live in the UK

https://www.gov.uk/individual-savings-accounts

CKic

Yes, I have read that. The situation is that she is not subscribing to a new ISA but transferring from an existing one that has been opened when she was working and living in the UK. If HMRC allows expats to transfer ISA, providers must offer a way for those expats to open an account.

eskbanker

CKic said:

Yes, I have read that. The situation is that she is not subscribing to a new ISA but transferring from an existing one that has been opened when she was working and living in the UK. If HMRC allows expats to transfer ISA, providers must offer a way for those expats to open an account.

Yes, I understand that she only wants to open one for the purposes of transferring, but the quoted wording clearly says that you need to be UK resident to open one (without qualifying that with any distinction between doing so for new or old money).

isasmurf

eskbanker said:

CKic said:

Yes, I have read that. The situation is that she is not subscribing to a new ISA but transferring from an existing one that has been opened when she was working and living in the UK. If HMRC allows expats to transfer ISA, providers must offer a way for those expats to open an account.

Yes, I understand that she only wants to open one for the purposes of transferring, but the quoted wording clearly says that you need to be UK resident to open one (without qualifying that with any distinction between doing so for new or old money).

Opening an account to hold an ISA is different from opening an ISA. The definition of opening an ISA includes "holding a valid subscription". Opening an account to transfer an existing ISA into is not opening an ISA. GOV.UK wording refers to opening an ISA for a first subscription. 

The problem will be finding a bank that will allow an account to be opened without completing an ISA declaration to subscribe*, which is possible but I would be confident in saying not online, and that have customer service agents that understand the ISA rules properly. This would also need to be a bank that allows non UK residents to open any account with them. Such places are probably few and far between. 

*it used to be possible to cross out the bits of the ISA declaration that didn't apply when opening an account for transfer only purposes.

CKic

You are absolute right eskbanker about the ISA rules. From those application forms that I have seen, you have to declare you are resident in the UK for tax purposes when applying for an ISA account. May be this is a topic that Martin should highlight and advocate on behalf of those living and working abroad but still have ISA saving/investment accumulated before moving oversea. Working abroad is very real in our modern society. These people should not be penalised because of their circumstances. Afterall, in some countries, such as Canada, the saving/investment held in the UK is still being taxed in addition to the income earned from the job.

eskbanker

isasmurf said:

eskbanker said:

CKic said:

Yes, I have read that. The situation is that she is not subscribing to a new ISA but transferring from an existing one that has been opened when she was working and living in the UK. If HMRC allows expats to transfer ISA, providers must offer a way for those expats to open an account.

Yes, I understand that she only wants to open one for the purposes of transferring, but the quoted wording clearly says that you need to be UK resident to open one (without qualifying that with any distinction between doing so for new or old money).

Opening an account to hold an ISA is different from opening an ISA. The definition of opening an ISA includes "holding a valid subscription". Opening an account to transfer an existing ISA into is not opening an ISA. GOV.UK wording refers to opening an ISA for a first subscription. 

The problem will be finding a bank that will allow an account to be opened without completing an ISA declaration to subscribe*, which is possible but I would be confident in saying not online, and that have customer service agents that understand the ISA rules properly. This would also need to be a bank that allows non UK residents to open any account with them. Such places are probably few and far between. 

*it used to be possible to cross out the bits of the ISA declaration that didn't apply when opening an account for transfer only purposes.

Yes, point taken, but the technical distinction you make is effectively moot if there are no providers who recognise it!  I don't believe that the ISA regulations have kept pace with all the subsequent tightening of KYC/AML controls, etc, so I can see why ISA providers would take the view that they're not prepared to open (in the generic sense) accounts for non-residents.

Happy to be corrected if anyone identifies one or more providers able and willing to accept ISA transfer applications from non-residents without existing accounts though....

xylophone

See https://www.thisismoney.co.uk/money/expat/article-6618459/Can-Isa-abroad-close-it.html

While you can keep accounts open you might not be able to transfer your cash Isa pot to another account once you have left the UK.

One of the drawbacks of this will be that you may end up losing out on interest if the rate becomes uncompetitive, for example if a temporary bonus ends or at the end of a fixed-rate deal.

While you may be allowed to transfer your balance under HM Revenue and Customs rules, most banks won’t accept new accounts if you are not a UK resident any more, even if you are moving an existing balance from an old Isa.

https://community.hmrc.gov.uk/customerforums/pt/734b9097-77ed-ec11-b5cf-00155d9c6b71

 If HMRC allows expats to transfer ISA, providers must offer a way for those expats to open an account.

No provider is compelled to accept an ISA transfer.

https://www.gov.uk/guidance/transfer-an-isa-if-youre-an-isa-manager

CKic

Thank you very much for all your contributions to this thread. 
I am finding it difficult to understand why ISA providers would put up barrier to money that is already in the system?

eskbanker

CKic said:

I am finding it difficult to understand why ISA providers would put up barrier to money that is already in the system?

I think it's a generic reluctance to have anything to do with non-residents, as this can be more work for them, so complying with one country's regulations is usually seen as enough....