Cash Isa transfers 21 December 2022 at 6:48PM in ISAs & tax-free savings 10 replies 358 views

susanann_2

I want to transfer my cash isa to another provider, but only want to transfer part of it not the whole balance. I have made a withdrawal in the current year from old money not current year money, and then paid it back in as it was a flexible isa in this current year which was still replacing old money can I still transfer part of the isa or do I have to transfer all of it. I understand if you have paid in current year money you have to transfer the whole balance but I’m not sure in the instance. Am hoping someone knows the answer to this. 

alternate

Unless either provider forbids partial transfers (rare but I have seen it) then you can transfer previous years contributions as many times as you like.

Reed_Richards

At the end of the last tax year you held £X in your ISA.  You can transfer some or all of that £X to a new provider.

This year you have contributed a further £Y.  If you want to transfer this new money to a new provider you must transfer all of it. 

ISA providers like to hook you in by blurring the boundary between this years ISA and an ISA containing money from previous years.  I think it is less confusing to think of them as separate entities.    

eskbanker

susanann_2 said:

I have made a withdrawal in the current year from old money not current year money, and then paid it back in as it was a flexible isa in this current year which was still replacing old money

Withdrawals from flexible ISAs are treated as being from current year money, as explained at https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#f-isa

Flexible ISA withdrawals are deemed to be firstly of current year subscriptions, and secondly of previous year funds. Replacements are deemed to be firstly of previous year funds, and secondly of current year subscriptions.

Have you paid anything in during this year?

susanann_2 said:

I understand if you have paid in current year money you have to transfer the whole balance but I’m not sure in the instance. Am hoping someone knows the answer to this. 

The rule is basically that all current year money has to be in the same place, so you can't transfer some of it but would need to transfer all (or none) of it, but not necessarily the entire balance of the account.

Reed_Richards said:

ISA providers like to hook you in by blurring the boundary between this years ISA and an ISA containing money from previous years.  I think it is less confusing to think of them as separate entities.    

Each to their own but they're not inherently separate entities as such - any given ISA can contain current year money and prior year money.  If you choose to have current year money and prior year money in separate ISAs then that's your prerogative but many don't.  I'm not seeing how ISA providers are 'blurring the boundary', as they all have to keep track of the distinction for reporting to HMRC, and even if they did blur the boundary, how would that hook people in?

Reed_Richards

eskbanker said:

Reed_Richards said:

ISA providers like to hook you in by blurring the boundary between this years ISA and an ISA containing money from previous years.  I think it is less confusing to think of them as separate entities.    

Each to their own but they're not inherently separate entities as such - any given ISA can contain current year money and prior year money.  If you choose to have current year money and prior year money in separate ISAs then that's your prerogative but many don't.  I'm not seeing how ISA providers are 'blurring the boundary', as they all have to keep track of the distinction for reporting to HMRC, and even if they did blur the boundary, how would that hook people in?

But having a continuing ISA adds hugely to the difficulty of understanding what you can and cannot do.  Even your detailed explanation above is open to misinterpretation because there are two answers depending on whether the OP made a contribution this year or just replaced a withdrawal - and the OP did not make it clear which.  If this year's ISA was a separate entity from previous years' then there would be no ambiguity.  ISA providers like their customers to think "Oh, I opened an ISA last (tax) year, I'll add some more money to it".  The providers themselves have to keep track of what is this tax year's money and what is not but this is much harder for the customer.  

eskbanker

Reed_Richards said:

eskbanker said:

Reed_Richards said:

ISA providers like to hook you in by blurring the boundary between this years ISA and an ISA containing money from previous years.  I think it is less confusing to think of them as separate entities.

Each to their own but they're not inherently separate entities as such - any given ISA can contain current year money and prior year money.  If you choose to have current year money and prior year money in separate ISAs then that's your prerogative but many don't.  I'm not seeing how ISA providers are 'blurring the boundary', as they all have to keep track of the distinction for reporting to HMRC, and even if they did blur the boundary, how would that hook people in?

But having a continuing ISA adds hugely to the difficulty of understanding what you can and cannot do.  Even your detailed explanation above is open to misinterpretation because there are two answers depending on whether the OP made a contribution this year or just replaced a withdrawal - and the OP did not make it clear which.  If this year's ISA was a separate entity from previous years' then there would be no ambiguity.  ISA providers like their customers to think "Oh, I opened an ISA last (tax) year, I'll add some more money to it".  The providers themselves have to keep track of what is this tax year's money and what is not but this is much harder for the customer.  

There's undoubtedly some complexity involved with flexible ISAs (and others) but the point is that this stems from the legally-defined ISA rules themselves (hence the source of my quote) rather than anything that ISA providers do or say.

There are undeniably some who get themselves confused about ISA rules, but I don't see any evidence that this is all some conspiracy maintained by the dastardly providers, and even if your one-ISA-per-year proposition was to be adopted into legislation, there would still be a distinction between what can be done with the current year's one versus those from previous years, so it's still unclear to me how it would resolve the issues you believe are prevalent....

Reed_Richards

I would resolve the issue by insisting that ISA providers assign a new account number to the current tax year's ISA.  When you open the ISA you can specify that it be consolidated with any previous years ISA held by the same provider at the end of the tax year or not.  This might have the effect of encouraging customers to shop around for their ISA a bit more each year.

I'm not suggesting that providers do anything more dastardly than gently trying to steer existing customers away from shopping around for their ISA.     

eskbanker

Reed_Richards said:

I would resolve the issue by insisting that ISA providers assign a new account number to the current tax year's ISA.    

Are you lobbying your MP to propose the requisite changes to the legislation?

Reed_Richards

No, instead I'm doing nothing because I actually do understand the rules (and I have no faith whatsoever in my MP).  But until questions to this forum from people who don't understand the rules differentiating new and old ISAs dry up, I'll remain of the opinion that there is room for improvement.  

susanann_2

Reed_Richards sorry I don’t now how to copy the quote down onto here. Just to hopefully make it a bit clearer. It was old money in the isa i made a withdrawal from and then replaced. It was the exact amount taken out and replaced. It was a flexible isa so no problem putting the money back. I have made no other payments in during the current year just the replacement. I want to keep this isa open by leaving a small balance in there in case I want to transfer back into it. I am moving it out for a 1yr fixed rate 

Reed_Richards

No problem @susanann_2 .  Since you have not made any new contributions this year to the ISA (just replaced money you withdrew) then you can transfer any amount you wish to, as much or as little as you choose.