ISA transfer, which tax year?

Yorkshire_money

Hi,

I am a first time investor, looking to transfer money from a cash ISA to a Vanguard 80/20 stocks and shares ISA.

I went part way through setting this up and one of the questions is: 

Which tax year are you transferring?

Current tax year, balance from 6th April. Or Previous tax year balance of lSA before 6 April. 

I had a fixed rate, 12 month, ISA that matured in August. Which give me a bit of interest. I had not added anything to the Isa for that 12 month period.  

Could you please tell me which option l should select?

I am looking to transfer a small amount at first, as a trial. Then transfer a couple of larger Isa amounts later. Is that possible?

Thank you. 

P.S l am waiting to hear from Vanguard but thought this question might be useful for someone else too. 

eskbanker

Yorkshire_money said:

Which tax year are you transferring?

Current tax year, balance from 6th April. Or Previous tax year balance of lSA before 6 April. 

I had a fixed rate, 12 month, ISA that matured in August. Which give me a bit of interest. I had not added anything to the Isa for that 12 month period.  

Could you please tell me which option l should select?

That wording is cumbersome and confusing - ISA contributions are categorised according to the tax year within which they were made, so reference to balances is misleading.  If you had a 12 month ISA maturing last month then it was 2023/24 money, i.e. previous tax year.

Yorkshire_money said:

I am looking to transfer a small amount at first, as a trial. Then transfer a couple of larger Isa amounts later. Is that possible?

I think Vanguard permits partial transfers, but what do you expect to achieve by 'trialling'?

Albermarle

The question means in which tax year did you add the money.

Yorkshire_money

"I think Vanguard permits partial transfers, but what do you expect to achieve by 'trialling'?"

As it is the first time l have transferred from my cash ISA to a stocks and shares ISA. I wanted to make sure the money goes across okay. Before l put a much larger amount in later. 

Thank you for the replies. 

dales1

I would apply to transfer the full intended amount, without any worries at all.

These transfers are simply routine transactions for the institutions involved. I've done lots.

If they get it wrong, they will remedy it for sure. In reality, it either goes through, or it fails on your documentation.

Just check and double check every detail on your application form, and keep a copy of it.

Transfers can take a while - just bear with them.

Yorkshire_money

Thank you for the replies and advice. My idea is to transfer an initial 5k, see that go through.  Then transfer another 40k, leaving that all in a Vanguard 80/20 fund.

I intend to add various amounts each year. Hopefully, over a 10 year period, the fund will increase. I would then change the ISA from growth to income. 

FIREmenow

If you've got £45k to transfer, and you want to invest in Vanguard's Life strategy 80 (80/20) fund, there are other, cheaper brokers to buy and hold that are flat-fee rather than percentage fee.

iWeb currently had no platform fee, and it is £5 per transaction. So transferring and investing £5k and then £40k would cost you £10 (2x transaction fee) (plus ocfs, which are set by the fund and usually about the same scripts platforms).

Vanguard's platform fee is 15% 0.15% per year with no transaction costs, so on £45k it would be £67.50 per year, plus (ocfs as above) 

Then, if you want to regularly invest after that, you could be better opening a second ISA with a percent percentage fee broker (like Vanguard) with no transaction fees.

There's an explanation of this in Monevator's cheap S&S ISA hack: https://monevator.com/cheapest-stocks-and-shares-isa-hack/

eskbanker

FIREmenow said:

Vanguard's platform fee is 15% per year

That doesn't sound very competitive! 😮

FIRE your proof-reader now.... 😉

FIREmenow

eskbanker said:

FIREmenow said:

Vanguard's platform fee is 15% per year

That doesn't sound very competitive! 😮

FIRE your proof-reader now.... 😉

Crikey, edited! You can tell the proofreader's on holiday 

Yorkshire_money

Interesting comment about fees. When l first started looking into opening a S&S ISA, l went to my bank. I eventually had a meeting with a wealth advisor, from a company linked to my bank (l won't name either).

After the free consultation,  l would have been charged around £1,300 for taking their advice. Their monthly fee would have been around £120 a month. Until l started looking into this further, l presumed all S&S ISAs had similar costs linked to them.

I appreciate someone with more financial knowledge than me might say the service and returns would justify the costs. But it seemed expensive and would be eating into my investment. 

eskbanker

Yorkshire_money said:

Interesting comment about fees. When l first started looking into opening a S&S ISA, l went to my bank. I eventually had a meeting with a wealth advisor, from a company linked to my bank (l won't name either).

After the free consultation,  l would have been charged around £1,300 for taking their advice. Their monthly fee would have been around £120 a month. Until l started looking into this further, l presumed all S&S ISAs had similar costs linked to them.

I appreciate someone with more financial knowledge than me might say the service and returns would justify the costs. But it seemed expensive and would be eating into my investment. 

The usual comment on here is that people should either DIY or use the services of an IFA (the 'I' being key, i.e. independent), with tied advisors employed by banks generally offering poor value for money.

For those happy to DIY, by deciding on their own objectives, strategy, etc, and then choosing and managing their own investments, the costs will generally be substantially less than for those seeking advice, although the advisor community will naturally point out that a like-for-like comparison shouldn't just be about upfront and visible platform/fund charges, i.e. the two approaches entail different risks and so on, as well as the costs and liabilities associated with the advice itself....