Transfer S&S ISA to Cash ISA (incl. this year's contributions)

Zuzi

I am grateful for the first pointer/answer I received in a different subforum, but it situation seems a bit more complex so thought I would ask here, too.

- I have a S&S ISA with Wealthify that I opened a year ago. Last FY I contributed ca 5K to it, and I am continuing this year with 50 pounds a month
- I also have a Cash ISA with Marcus, opened and funded just this FY, with currently ca 17K in it

Wealthify has grown at a low rate (2pc), but mostly I am not very convinced about the robo investment technology, so I want to turn this into cash. I am a higher rate taxpayer so ideally I would like the money to stay in the ISA wrapper.

Problem - Marcus does not allow transfers in, so I can't transfer it into there.

Can I open a second Cash ISA with a different provider and use it to transfer money away from Wealthify, considering some of that amount were contributions from this year? (although they were made when it was a S&S ISA, I am not planning to add anything else to the new ISA where the Wealthify money gets moved to)

Zuzi

Maybe I should only transfer last year's contributions, would that be easier?

isasmurf

You cannot transfer your S&S contributions made this tax year to another cash ISA while still having current tax year contributions with Marcus. When you transfer contributions  they are deemed to have been made to the ISA type they were transferred to, and you must keep all current tax year contributions made to each type together.

Your options are
1. Transfer only previous tax year contributions & any growth to a cash ISA leaving the current tax year contributions in the S&S ISA, or
2. Transfer both the S&S ISA and the Marcus cash ISA to another cash ISA that allows transfers in. 

Zuzi

Thank you very much @isasmurf, very helpful and clear.

I looked at some Cash ISAs and I think I will open one with Lloyds where I have a current account and transfer previous tax year's contributions from the S&S ISA in there. I'll keep the Wealthify one for now but will probably reduce/stop the contributions there, and since the amount there is not too high I can also just withdraw/close the account, doesn't necessarily need to be transferred into another ISA.

badger09

Without wishing to muddy the waters… there are other options.
Do you intend to keep investing in an S&S ISA this tax year (whether with Wealthify or not) or do you intend to save only in cash?
Is your Cash ISA with Marcus Easy access or Fixed Rate?

Zuzi

I'm listening, @badger09

I'm not against S&S ISAs as such although I do find them more complicated than Cash ISAs. I opened the Wealthify ISA because of the MSE cashback, and towards the end of last year I added in the lump sum of 5K to put even more under the wrapper.
I just feel that with the higher rates available on cash savings, combined with the robo approach that for me personally isn't very convincing, I'd like the money to go somewhere where it can right now earn more.

ETA my Wealthify growth so far is just over 2%.

I have a GIA with Vanguard where I own equities etc, so I was thinking that I would put my 20K allowance in Cash ISAs.

My Marcus ISA is Easy Access as far as I can tell, I wasn't able to fund it fully right away so I specifically went for a non-fixed account. (I also have a Cash ISA from last year with Santander, but that one is fixed for a year and will end this autumn)

masonic

You could consider transferring the S&S ISA from Wealthify to a conventional investment platform. You could then choose appropriate investments yourself, for example a money market fund if you want to benefit from the current higher interest rates. You can see for example how returns from CSH2 have increased with interest rates, with near zero volatility (at present the gradient is about 4.5%):

With a smaller sum, you'd be better off with a fund equivalent of this ETF, and there are several to choose from.

Zuzi

Thanks @masonic for the tip but I don't feel knowledgeable enough to choose specific funds, and beyond Wealthify and Vanguard LS my experience in general with stocks and funds is very limited 

I've been looking at my ISAs, even the Cash one from previous year that is with Santander and fixed until end of October, and Lloyds have a really good offer for a one year fixed ISA at a considerably better rate (than both Santander and Marcus) that even with the exit fee from Santander I am inclined to just open one with Lloyds and move all my Cash ISAs as well as last year's S&S ISA into it, then it's all in one place. I just messaged Lloyds because I want to be certain that there is no limited funding window and I can fund it with multiple transfers in, and if the answer is yes, that is most likely what I will do.

masonic

The real question then, is whether Wealthify supports partial ISA transfers out, as some S&S ISA providers don't, and you cannot transfer in full due to holding cash ISA subscriptions elsewhere.

badger09

Zuzi said:

I'm listening, @badger09

I'm not against S&S ISAs as such although I do find them more complicated than Cash ISAs. I opened the Wealthify ISA because of the MSE cashback, and towards the end of last year I added in the lump sum of 5K to put even more under the wrapper.
I just feel that with the higher rates available on cash savings, combined with the robo approach that for me personally isn't very convincing, I'd like the money to go somewhere where it can right now earn more.

ETA my Wealthify growth so far is just over 2%.

I have a GIA with Vanguard where I own equities etc, so I was thinking that I would put my 20K allowance in Cash ISAs.

My Marcus ISA is Easy Access as far as I can tell, I wasn't able to fund it fully right away so I specifically went for a non-fixed account. (I also have a Cash ISA from last year with Santander, but that one is fixed for a year and will end this autumn)

I’m so sorry. 

Been away for a few days & didn’t have time to respond but I see you’ve decided to revert to cash. I was going to suggest similar to @masonic - transfer the full S&S balance as cash to another platform and buy a near cash equivalent, or something that you’re already familiar with, such as the Vanguard LS range. 

I don’t think we know much about your circumstances, age,  how long & what you are saving for etc, but just a reminder that inflation will erode the value of your savings. That’s a risk many don’t really consider. 

Good luck

Zuzi

No need at all to apologise @badger09, I appreciate your and masonic's thoughtful advice. I only started with ISAs last year and as a (recently turned) higher rate taxpayer with larg-ish savings, I'll probably fill next year's one with cash too. It is a bit abstract right now to visualise the tax savings on a S&S ISA. I do however intend to continue investing, as you say, via the LS range with Vanguard, with sums I am comfortable with.

Yesterday I opened the Lloyds ISA at 5% fixed for 12 months, and am in the process of transferring all but my current year's S&S ISA Wealthify money into it. It will be helpful to have it all in one place.