Switching to ISA with no 'Transfer in'

cplumb281

Hi,

1. I currently have an ISA with Paragon, I have used the max £20k ISA allowance and this is a flexible ISA.
2. I am looking to empty this ISA to my current account and then transfer funds from my current account into a new ISA with Zopa, which is also flexible HOWEVER does not allow transfers.

If i did this, would my transfer into the new Zopa ISA go over the £20k allowance and interest would then be taxable?

Hoping it was possible for the two ISA's to offset each other (e.g. negative Paragon allowance + positive Zopa allowance = 20k allowance)

Thanks

[Deleted User]

Hi,

if you transfer ISA to current account you will lose the ISA tax free benefit.

eskbanker

If your current year £20K is in Paragon then you can't get it into another provider that doesn't allow transfers unless you exercise the one-off self-transfer provision:

In some cases subscriptions to a second ISA may be valid if all the following apply:

• the investor subscribes to 2 cash ISAs, in the same tax year
• subscriptions to the first ISA subscribed to were valid
• all of the current year subscriptions to the first ISA subscribed to were withdrawn (whether or not that ISA was closed) before subscriptions to the second ISA were made

This is also subject to the following requirements:

• the first cash ISA to be self-transferred in a tax year is valid and does not need to be repaired
• the second (and any subsequent) self-transferred cash ISA is not valid and is not eligible for repair

• the first cash ISA may either:

  • be closed and all the funds held in the ISA withdrawn, including any subscriptions for earlier years
  • remain open and after the self-transfer will hold only subscriptions made in previous years

If the first cash ISA remains open, no further subscriptions can be made to it in the tax year of the self-transfer.

https://www.gov.uk/guidance/close-void-or-repair-an-isa-if-youre-an-isa-manager#repair-void