Transferring Cash ISA questions

CaptainRock

I've not transferred an ISA for many many years so don't know the do's and don'ts.

My Cash ISA is currently with a Credit Union and I will be getting the interest (annually) of 4% early April 2025 but I'm thinking of transferring it to Trading 212.

I'm sure I read that Trading 212 only accept certain transfers and I'm wondering if they would accept a transfer from a Credit Union?

I've not deposited any money to the ISA this year but have recently come into some money. Do I add £20,000 to my current Cash ISA with my credit union and receive 4% interest in early April 2025, or transfer to Trading 212 and add the £20,000 to this new account?

When transferring from one provider to another: Once the new provider has setup the account and money is in this new account where do I stand with the ISA allowance?

Does a provider keep track of what has been happening to a Cash ISA account and once it has been transferred, all data concerning deposits etc. is passed to the new provider?

If I deposited £20,000 into the Cash ISA with the Credit Union, waited until early April for the 4% interest, then transferred to T212, would I be able to deposit another £20,000 into the T212 account?

I'm completely at a loss as to the best way of going about this.

eskbanker

Firstly, don't be under any illusion that you'd earn the full annual interest of 4% on £20K deposited for just over two months!

If your existing ISA is a fixed term one, with penalties for early access, then you would indeed need to wait until maturity before transferring, but if it's an easy access one then they'd pay interest pro rata up to the date of closure.

As you recognise, you'd need to check whether Trading 212 will be able to take a transfer from your existing provider.

If they do, then it's up to you whether to add the current year's allowance (and/or next year contributions) before or after the transfer, which has the effect of treating deposits as if you'd made them to the receiving provider all along.

slinger2

When you "transfer" from one provider to another you don't use any of your £20k allowance.

It's not clear what sort of Cash ISA you have with the credit union. Are you sure that you can add more money?

One option would be to open a T212 Cash ISA now with your £20k of new money. In April you could transfer the credit union ISA to T212 (if that's possible) or somewhere else.

CaptainRock

I've done some searching and found that my current Cash ISA is a "non-flexible" Cash ISA and that the interest is calculated on a daily basis and is credited annually on or around 6 April.(I don't know if this information will help anyone reading this?)

I've also thought (and this might make things easier) that I could leave the money in my current Cash ISA and have a new Cash ISA with T212 and put £20,000 into that account.

Would that work?

So depositing £20,000 into my Credit Union Cash ISA now would be a waste of time as I would only get 2 months of interest on the full amount of money?

I would have had to have deposited the £20,000 at the start of the tax year?

Is a ISA tax year (6 April to 5 April)  the same for all providers?

PRAISETHESUN

CaptainRock said:

I've done some searching and found that my current Cash ISA is a "non-flexible" Cash ISA and that the interest is calculated on a daily basis and is credited annually on or around 6 April.(I don't know if this information will help anyone reading this?)

I've also thought (and this might make things easier) that I could leave the money in my current Cash ISA and have a new Cash ISA with T212 and put £20,000 into that account.

Would that work?

So depositing £20,000 into my Credit Union Cash ISA now would be a waste of time as I would only get 2 months of interest on the full amount of money?

I would have had to have deposited the £20,000 at the start of the tax year?

Is a ISA tax year (6 April to 5 April)  the same for all providers?

Assuming both accounts pay the same rate, then the interest will be the same regardless of where you save it. There's no magic loophole to suddenly get a year's worth of interest in 2 months by moving between providers.

Interest is typically calculated daily and paid annually. 4% annual interest is roughly equivalent to 0.011% daily interest. Each day an amount of interest is set aside by the bank, and it will be all paid on 6th April, or when you close the account. If for example you paid £20k into your account on the final day of the year, then you should expect to get 1 days interest, not 365 days interest (ie. 1 years worth)!

And yes, all ISA accounts operate using the UK financial year.

eskbanker

CaptainRock said:

Is a ISA tax year (6 April to 5 April)  the same for all providers?

Just to be clear, the only significance of the tax year for ISAs is it marks the period over which the annual contribution limit applies, i.e. you can pay up to £20K into ISAs from 6 April of one year to 5 April of the next.

It's as simple as that and has nothing to do with interest earning, or interest payments, or account maturities, etc, unless you happen to have an ISA that was opened on 6 April - it sounds like you may have done, but don't let that mislead you as to the actual significance of the tax year, as ISAs can be opened and funded on any of the other 364 days of the year too!

jimjames

CaptainRock said:

If I deposited £20,000 into the Cash ISA with the Credit Union, waited until early April for the 4% interest, then transferred to T212, would I be able to deposit another £20,000 into the T212 account?

Not really sure why you would want to do that when you can get 5% on that money in T212 account?

2Chickens

Hi,
My Virgin Cash ISA expired on January 31 and was automatically switched to an Easy Access Cash ISA with a variable interest rate of 4.51%. I would like to transfer to Trading 212 but I have used my allowance for this year, is it possible to open an account with zero money and then transfer into it? Also the Virgin ISA has considerable more than £85000, do you think it wise to split the ISA to protect my savings.

PRAISETHESUN

2Chickens said:

Hi,
My Virgin Cash ISA expired on January 31 and was automatically switched to an Easy Access Cash ISA with a variable interest rate of 4.51%. I would like to transfer to Trading 212 but I have used my allowance for this year, is it possible to open an account with zero money and then transfer into it? Also the Virgin ISA has considerable more than £85000, do you think it wise to split the ISA to protect my savings.

The £20k limit only applies to "new" money each financial year. Transfers of existing ISA money doesn't count towards the limit so there's nothing stopping you transferring between providers. Just make sure you use the prescribed ISA transfer process (usually filling out a form with your new provider) rather than withdrawing it and trying to redeposit it yourself.

And it's up to you for your risk tolerance, but personally I'd split your money between providers to stay within the £85k FSCS limits.