Moving From Stocks and Shares ISA To Cash ISA

viperdudeuk

I have a decent balance which is above the annual contribution limit in a stocks and shares ISA which I have decided to convert into a cash ISA. So far in the current tax year I have only contributed around £100 into the existing stocks and shares ISA and no other contributions to any other ISA. What I want to do is transfer this ISA to a fixed term cash ISA with a local building society. Also I want to open a standard cash ISA with the same building society to contribute up to the remaining contribution level for the current tax year. 

After speaking with the local branch I was told that as I had already "subscribed" to the stocks and shares ISA for the current year I wasn't allowed to contribute to any other ISA this tax year. As far as I know this is complete rubbish. After speaking with the Head Office they are going to call me back to confirm the situation.

Is what I am intending to do allowed in the ISA rules. After looking at gov.uk it seems fairly straightforward and perfectly legal. Does anyone have any comments on this?

D924

You're entirely right here.

The only thing that would stop you is if the S&S ISA provider for some reason decided to be problematic and decide that they will not process your transfer, requiring you to withdraw the money instead.

Hopefully they are just misinformed rather than being intentionally problematic to try and prevent you from leaving.

In the case that they are being intentionally problematic I am unsure what options you'd have.

Johnjdc

You can definitely transfer the money to a fix.

Can you open a new standard cash ISA? I'm not sure, because then you will have current year money in two Cash ISAs.

Could you transfer only past year's contributions, and get a new 2023/24 cash ISA, or transfer everything but make your new contributions to the S&S ISA but invest in money market funds rather than shares, so it functions as a cash ISA in effect... maybe?

viperdudeuk

Thank you for your reply. 

Just to be clear. I have only spoken to the new provider so far and all the information in my initial post was based on what they told me. 

masonic

viperdudeuk said:

Is what I am intending to do allowed in the ISA rules. After looking at gov.uk it seems fairly straightforward and perfectly legal. Does anyone have any comments on this?

No it is not. You can "transfer this ISA to a fixed term cash ISA with a local building society", but you cannot also "open a standard cash ISA with the same building society to contribute up to the remaining contribution level for the current tax year". This would constitute subscribing to two cash ISAs in the same tax year, since after your transfer you would be treated as having subscribed to the fixed term cash ISA. The only exception would be if the cash ISA providers allowed you to manage multiple sub-accounts under the same cash ISA (the so-called split-ISA provider).

Perhaps you missed this:

https://www.gov.uk/guidance/transfer-an-isa-if-youre-an-isa-manager#what-amounts-can-be-transferred

There are two things you can do:

1) Top up the fixed cash ISA to use the rest of your allowance within the funding window (or top up the S&S ISA prior to the transfer)

2) Transfer all but the £100 subscribed to the S&S ISA this tax year (if both providers support partial transfers). You could use the rest of your allowance in a different cash ISA.

Albermarle

Johnjdc said:

You can definitely transfer the money to a fix. Correct

Can you open a new standard cash ISA? I'm not sure, because then you will have current year money in two Cash ISAs. Yes that would be not allowed.

Could you transfer only past year's contributions, probably difficult and get a new 2023/24 cash ISA, or transfer everything but make your new contributions to the S&S ISA but invest in money market funds rather than shares, so it functions as a cash ISA in effect... maybe? Not a bad idea.

See above 

badger09

Probably the easiest way to achieve what you want to do is to first open an instant access (which is what I assume you mean by standard) Cash ISA with your chosen Building Society and ask them to transfer in the whole of your S&S ISA. Once that transfer is complete, open the Fixed Rate ISA & have previous year's subscriptions, or any amount which leaves at least £100 in the instant access ISA, transferred into it. Then carry on paying into the instant access ISA.