Partial ISA transfers when ISA is combination of current and previous years?

Sepulveda

Can anyone advise...my partner has a Bank of Scotland ISA that matured yesterday to a 1.35 ISA Saver. I encouraged him to open several new ISAs to transfer this to, so earlier this week helped him open a Zopa 4.8% (4.5% from 22/11) and Paragon Double Access 4.87%. 

Background - both of us were financially fairly clueless until I inherited a reasonable sum 12 months ago, and following that, I encouraged him to move the 13k in his low paying and long-standing ISA to a new, better one with his own bank BoS. He has paid £250 per month into the new ISA since last November, so it includes this year and previous years subsciptions.

So today, he was planning on transferring half the maturing BoS ISA to Zopa and half to Paragon. He has already put £700 into Zopa this week. We looked at the Zopa app today to initiate a transfer of £7k and I just realised that the BoS ISA contains some of this years subscriptions (£1750) and the rest is previous years, as the Zopa app asks how much is current year money. So we didn't complete the transfer, as I wanted to check, can he do this? i.e. do partial transfers when an ISA contains both this years funds and funds from previous years, and contributions span across 2 financial years?

Apologies if this question seems silly but it appears we both have a lot to learn!

Edit - thinking this through, I'm assuming it will be ok to do partial transfer as his ISA was opened in 2023? But not 100% sure and googling it has got me even more confused. 

masonic

You get to choose. I don't know what Paragon's position is concerning paying into multiple current year ISAs, but if you plan only to add to Zopa going forward, you'd be as well to transfer all the current year money from Paragon.

Sepulveda

I probably didn't make it very clear, sorry... Paragon and Zopa opened last week. Nothing in Paragon yet, some new money in Zopa. We want to transfer half of my partner's matured BoS ISA to Zopa, and the other half to Paragon.

I have a Paragon current year ISA and have just done a partial transfer to them, but that was from a 2023 fixed ISA, not one with a mix of subscriptions from multiple previous years including this financial year, which is what my partner has. 

I'm maybe overthinking this though!

refluxer

This doesn't answer your question, but one thing to be aware of for the future with Zopa is that they don't allow partial transfers out so when you decide to move your ISA funds to another provider, you'll need to move all of it in one go.

Essentially, all ISA pots you hold with them are considered to be part of the same 'Smart ISA' - they are not separate accounts. This is less of a problem if you only have an (easy) Access ISA pot with them, but will cause problems if you decide to open any Fixed Term ISA pots alongside it as you'd have to pay a hefty penalty to move your money out of them.

Also worth noting - Paragon have just announced an upcoming 0.25% reduction to their (non-ISA) Double Access account, so it's possible that the Double Access ISA will get a similar reduction (make sure your partner checks their emails).

masonic

Oh, ok. The point remains. He gets to choose where his current year subscriptions end up. If he wishes to split the current year subscriptions for any reason, then he should ensure both providers support partial transfers of current year money. Otherwise the partial bit would need to be done to the provider who does support it, leaving a full transfer to the second provider. Or he may have to stick to transferring the current year money together if BoS doesn't play ball. I can't think of any good reason not to include all £1750 in one of the two transfers, given he is transferring £7k in total.

Sepulveda

I hope Paragon doesn't reduce their rate but I guess it is likely, Zopa announced theirs just after we opened the ISA for my partner. The fact they don't allow partial transfers, and the variable rates, has some bearing on why I suggested he open more than one ISA, but he drew the line at two (I now have 10, including 2 fixed rate!). He was less concerned about interest rate and more concerned about easy access to funds for a potential purchase next year (no fixes for him) so I suggested these two, trying to get a balance between access, flexibility and interest rate. My own experiences of Zopa and Paragon have been good so far.

Sepulveda

Thanks @masonic - yes this is my thinking, that the £1750 current year subscription will be included as part of one of the partial transfers. I have all the T&Cs downloaded so I need to go through them again to check! Although sometimes it's not always clear.

masonic

There should not be any issue if keeping the current year subscriptions together and BoS will be ok with partial transfers in general. The reason splitting current year subscriptions can be problematic is that the change to the ISA rules permitting this is still fairly recent.

Sepulveda

@masonic yes absolutely, hence plan is current subscriptions transferred to Zopa, rolled up in the £7k. Then remaining amount to Paragon. I know Paragon seem to be a bit iffy about this - when you open new ISA with them, it states (if I remember correctly when I recently opened mine) you do not subscribe to another ISA in current year. But rules say we are allowed to of course. And my partner's ISA was opened in 2023..but he has put funds in this year which is why I've held him back from completing the Zopa transfer until I'm sure he is not doing anything wrong by going forward with it. So I need to make sure I've got it right! I hadn't actually thought until you mentioned it, about what BoS's stance would be on this though.

Qyburn

When talking about "this year's money" does that mean just the money paid in, or does it include interest earned on that money? I would have thought it would be the latter.

I may be overcomplicating but you could do this as three transfers ..
(1) all current year to Zopa
(2) a specified sum to Paragon, such that it will end up with near enough 50%
(3) transfer whole (remaining) balance to Zopa, closing the coding account 

Rich2808

Sepulveda said:

@masonic yes absolutely, hence plan is current subscriptions transferred to Zopa, rolled up in the £7k. Then remaining amount to Paragon. I know Paragon seem to be a bit iffy about this - when you open new ISA with them, it states (if I remember correctly when I recently opened mine) you do not subscribe to another ISA in current year. But rules say we are allowed to of course. And my partner's ISA was opened in 2023..but he has put funds in this year which is why I've held him back from completing the Zopa transfer until I'm sure he is not doing anything wrong by going forward with it. So I need to make sure I've got it right! I hadn't actually thought until you mentioned it, about what BoS's stance would be on this though.

You are legally entitled to pay into more than one cash isa each year - indeed as many as you like - up to the £20,000 limit since 1 April.

Paragon are a portfolio/split ISA provider - so you can open multiple ISAs with them.

Whatever their terms say they cannot stop you opening ISAs with other providers and paying in funds to them in addition to your Paragon product. Because the government and Parliament are responsible for the rules not Paragon - and Paragon will of course never know (unless you seek to move current year funds to them and say so).

So ignore Paragon's terms and conditions about not also opening isas and paying in new current tax year funds with other providers too - because they have no legal power to enforce them. They can enforce what you transact with them - but not other providers.

Cos in the end Parliament trumps Paragon! And the government decides the rules - not them.