Transferring ISA replacement allowance

thegentleway

Just realised my ISA interest rate has dropped to 3.7% so looking to transfer to Trading 212 to get 5.05% however I've got £4.5k replacement allowance to use up, will this get transferred or would I lose this?

eskbanker

You'd lose it:

Withdrawals of cash that cannot be replaced without counting towards the annual subscription limit include the following:

• by way of an ISA transfer to another provider
• [...]

https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#flexible-isas

grumpy_codger

So, the OP can transfer the current balance, keep the old ISA open, top it up later, then transfer again... Correct?

Or even withdraw 4.5K from T212 ISA, use this money to top up the old ISA and then transfer again completely. In this case the replacement allowance will get 'transferred' to T212. ?

slinger2

You always need to check whether the providers have any specific rules about transfers.

thegentleway

grumpy_codger said:

So, the OP can transfer the current balance, keep the old ISA open, top it up later, then transfer again... Correct?

Or even withdraw 4.5K from T212 ISA, use this money to top up the old ISA and then transfer again completely. In this case the replacement allowance will get 'transferred' to T212. ?

Can anyone confirm whether this works?

gt94sss2

@thegentleway

There is a separate board for ISAs but which years ISA allowance do you want to transfer to Trading 212?

It makes a difference..

thegentleway

gt94sss2 said:

@thegentleway

There is a separate board for ISAs but which years ISA allowance do you want to transfer to Trading 212?

It makes a difference..

@gt94sss2 apologies for using the wrong board.

It's this year's allowance as in 24/25 tax year.

slinger2

thegentleway said:

grumpy_codger said:

So, the OP can transfer the current balance, keep the old ISA open, top it up later, then transfer again... Correct?

Or even withdraw 4.5K from T212 ISA, use this money to top up the old ISA and then transfer again completely. In this case the replacement allowance will get 'transferred' to T212. ?

Can anyone confirm whether this works?

Yes. this is ok. Transfer the old cash ISA to T212 but make sure it stays open, eg leave a pound in there. Take out the 4.5k from the T212 cash ISA and "replace" it in the old ISA (from where it was withdrawn earlier in the same tax year). Transfer the old ISA to the T212 ISA.

This is all allowed. However bear in mind the providers can have restrictions on partial transfers.

Would be simpler to replace the money first and do just 1 transfer

gt94sss2

@thegentleway

As you are talking about this year's ISA allowance and both your current ISA and the Trading 212 one are flexible you can transfer your entire ISA as it is and you will not lose the money you have temporarily withdrawn.

Your ISA provider should tell T212 that you have contributed the net amount (as if you had not paid the withdrawn amount) at in the first place - so you will be able to add it again.

From https://www.gov.uk/guidance/transfer-an-isa-if-youre-an-isa-manager#flexible-isa-transfers

Flexible ISA transfers

Where a Flexible ISA is transferred, you must provide the new manager with: the ‘net’ subscriptions in the current year, which is the total subscriptions in the year less any amounts withdrawn (disregarding any additional permitted subscriptions,defaulted subscriptions and Help to Buy ISA reinstatement subscriptions — if withdrawals equal or exceed the amounts subscribed, provide a £0 figure

No need to worry about leaving £1 etc and only transferring the rest.

slinger2

Seems high risk to empty it. I'm sure many providers will close the account if you empty it. You can only "replace" money to the same "account" from which you withdrew it.