ISA rules for partial transfers

etienneg

I understand that current (tax) year subscriptions must be kept together with the same provider, so if you transfer any of this money to another provider you must transfer all of it. But what happens if you have money from previous years and the current year in the same ISA and do a partial transfer?

For example, say you have £30,000 from previous years and £20,000 current year subscriptions together in the same ISA and you request another ISA provider to do a partial transfer. Where is the current year money after the transfer? It's clear what would have to happen for a transfer of £35,000 (current year money would have to move), or one of £15,000 (current year money would have to remain), but either could happen for a transfer of £25,000. Can you specify which you want, or is there a rule?

Second question: What about interest paid during the current year? Is this effectively treated like previous year money (so you can do what you like with it), or does it have to stay with the current year subscriptions? Or (hopefully not!) does it have to be split, with interest on current year subscriptions and that on previous year subscriptions being treated differently?

Third question: Is there an online reference explaining these rules that can be understood by ordinary people (that is, without knowing a lot of jargon that typically would only be known by those working in the industry)?

35har1old

etienneg said:

I understand that current (tax) year subscriptions must be kept together with the same provider, so if you transfer any of this money to another provider you must transfer all of it. But what happens if you have money from previous years and the current year in the same ISA and do a partial transfer?

For example, say you have £30,000 from previous years and £20,000 current year subscriptions together in the same ISA and you request another ISA provider to do a partial transfer. Where is the current year money after the transfer? It's clear what would have to happen for a transfer of £35,000 (current year money would have to move), or one of £15,000 (current year money would have to remain), but either could happen for a transfer of £25,000. Can you specify which you want, or is there a rule?

Second question: What about interest paid during the current year? Is this effectively treated like previous year money (so you can do what you like with it), or does it have to stay with the current year subscriptions? Or (hopefully not!) does it have to be split, with interest on current year subscriptions and that on previous year subscriptions being treated differently?

Third question: Is there an online reference explaining these rules that can be understood by ordinary people (that is, without knowing a lot of jargon that typically would only be known by those working in the industry)?

I assume you have not received any interest on this years subscriptions and would only have the interest on the £30,000.
So my answer would be £30,000 + interest to transfer i know that both amounts are earning interest but this has not yet been credited to the account.

Perhaps you should ask your current provider how much you can transfer. 

Transferring your ISA

You can transfer your Individual Savings Account (ISA) from one provider to another at any time.

You can transfer your savings to a different type of ISA or to the same type of ISA.

If you want to transfer money you’ve invested in an ISA during the current year, you must transfer all of it.

For money you invested in previous years, you can choose to transfer all or part of your savings.

masonic

etienneg said:

Can you specify which you want, or is there a rule?

You can specify what you want (as long as what you specify is possible within the rules around transfer of current year money). The model ISA transfer form has an explicit question about whether the transfer includes current year money.

etienneg said:

Second question: What about interest paid during the current year? Is this effectively treated like previous year money (so you can do what you like with it), or does it have to stay with the current year subscriptions? Or (hopefully not!) does it have to be split, with interest on current year subscriptions and that on previous year subscriptions being treated differently?

It depends. When you just have current year funds, then interest is considered part of the current year ISA such that the ISA would be transferred in full, including closing interest. As far as I'm aware there is no clear guidance in situations where there is a mixture of current and previous year funds. Accrued interest would not be transferred in the case of a partial transfer that includes all current year money where the account is left open, as it cannot be.

etienneg said:

Third question: Is there an online reference explaining these rules that can be understood by ordinary people (that is, without knowing a lot of jargon that typically would only be known by those working in the industry)?

Not really, and many of the misconceptions around ISAs result from the rules being presented in simplified form (such as people thinking they can only open one cash ISA per tax year). The most useful online reference is here: https://www.gov.uk/government/collections/isa-managers-guidance

I don't think it is particularly difficult to understand, but is directed at ISA managers rather than consumers.