TRANSFER PART OF PREVIOUS YEARS ALLOWANCE AND YOU MAY LOSE THE FLEXIBILITY ON PART NOT TRANSFERRED.

surreysaver

eskbanker said:

While transfers do indeed often allow you to nominate whether it's current or prior year money being transferred, the flexible ISA rules entail a pre-determined order of withdrawals and replenishments:

Flexible ISA withdrawals are deemed to be:

• firstly of current year subscriptions
• secondly of previous year funds

Replacement subscriptions are deemed to be:

• firstly of previous year funds
• secondly of current year subscriptions

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

The same document addresses transfers but as far as I can see doesn't really clarify the scenarios outlined in this thread....

When I've performed ISA transfers recently, the form asks whether I want to transfer current or previous years subscriptions. So presumably a transfer doesn't count as a withdrawal?
But then if you have an ISA which allows a maximum number of withdrawals, does a transfer count as a withdrawal under the T&Cs!?

surreysaver

Growingold said:

masonic said:

That's not a google search, it's an AI hallucination. It should not be trusted any more than a bloke down the pub who remembers reading something on the subject. It isn't how flexible ISAs work in reality.

Consider the following scenario:

• Start with £50k in a flexible cash ISA, £40k from previous years and £10k from current year.
• Then withdraw £20k. This results in £30k from previous years and the ability to make replacement subscriptions of £10k from previous years, followed by £10k from current year.
• Then partially transfer £20k. This results in £10k from previous years and the ability to make replacement subscriptions of £10k from previous years, followed by £10k from current year.
• Add £20k to original flexible cash ISA, add £10k to new cash ISA. This results in £30k in original flexible ISA (including £10k from current tax year), £30k in new ISA (including £10k from current year), allowance fully used and no rules broken.

If the google AI disagrees with that, then you should give it a stern telling off because it is wrong. Preferably in SHOUTY CAPS like this thread's title.

Where you would lose the ability to make the replacement subscriptions is if you transferred the previous year subscriptions in full (you'd lose the first £10k), or transferred the whole ISA in full (you'd lose the full £20k).

I totally agree with your scenario but unfortunately  my original ISA provider doesn't, that is why i googled it.  And AI comes up on a google search.  I posted my original post in case anyone else find themselves in the same situation as  just a word of caution, something to be aware could happen.

AI = Artificial Incompetence 

masonic

surreysaver said:

eskbanker said:

While transfers do indeed often allow you to nominate whether it's current or prior year money being transferred, the flexible ISA rules entail a pre-determined order of withdrawals and replenishments:

Flexible ISA withdrawals are deemed to be:

• firstly of current year subscriptions
• secondly of previous year funds

Replacement subscriptions are deemed to be:

• firstly of previous year funds
• secondly of current year subscriptions

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

The same document addresses transfers but as far as I can see doesn't really clarify the scenarios outlined in this thread....

When I've performed ISA transfers recently, the form asks whether I want to transfer current or previous years subscriptions. So presumably a transfer doesn't count as a withdrawal?
But then if you have an ISA which allows a maximum number of withdrawals, does a transfer count as a withdrawal under the T&Cs!?

HMRC doesn't treat it as a withdrawal, but when your provider imposes a penalty above a certain number of withdrawals, they almost certainly will count it as a withdrawal (just as they usually count closure as a withdrawal).

Northern_Wanderer

Northern_Wanderer said:

Ok, so I'm all confused by this thread now. I have just spent £xxx of a flexible ISA containing this years and last years balances, I also then transferred a partial amount of last years allowance (ISA remains open) to a diffierent provider, also flexible. I hope to top up some of the funds I spent before April. Now I am worried by this thread.....my terms say:

You can’t replace money into your Easy Access Cash ISA Exclusive if any of the reasons below are true.
– You transfer your ISA to another ISA provider.
– You close your ISA.
– The taxman takes your money to pay your tax bill.
– The taxman or court tells us that we can’t keep your money

I was fairly sure that I was unable to repay funds withdrawn to previous years only if I transferred the full previous years balance before repaying withdrawn funds. Am I correct? Transfer forms have various questions about which tax years you are transferring so I assume that is how they work out all the intricacies.

On a separate note, it's getting confusing to operate ISAs when you have a few different ones open! Need a spreadsheet to keep track!

So, my transfer of previous years allowance went through. I then got a letter from VM saying that as I had transferred current years subscritions, I'm unable to subscribe to my VM ISA until next tax year. VM by phonecall said I must contact recieving bank. Receiving bank says it is recorded as previous years subscriptions. I will go back to VM tomorrow. Not entirely sure what is going on.

Did the OP manage to sort out their problem? Obviously YBS & VM are one and the same.....

masonic

Northern_Wanderer said:

So, my transfer of previous years allowance went through. I then got a letter from VM saying that as I had transferred current years subscritions, I'm unable to subscribe to my VM ISA until next tax year. VM by phonecall said I must contact recieving bank. Receiving bank says it is recorded as previous years subscriptions. I will go back to VM tomorrow. Not entirely sure what is going on.

Sounds like they've generously granted you a new 2024/5 £20k ISA allowance to use elsewhere.

Northern_Wanderer said:

Obviously YBS & VM are one and the same.....

I must have missed that. Nationwide was the building society that acquired VM. Are you sure you're not confusing YBS with Yorkshire Bank?

I too would like to know if @Growingold was eventually able to sort this out.

Northern_Wanderer

masonic said:

Northern_Wanderer said:

So, my transfer of previous years allowance went through. I then got a letter from VM saying that as I had transferred current years subscritions, I'm unable to subscribe to my VM ISA until next tax year. VM by phonecall said I must contact recieving bank. Receiving bank says it is recorded as previous years subscriptions. I will go back to VM tomorrow. Not entirely sure what is going on.

Sounds like they've generously granted you a new 2024/5 £20k ISA allowance to use elsewhere.

Northern_Wanderer said:

Obviously YBS & VM are one and the same.....

I must have missed that. Nationwide was the building society that acquired VM. Are you sure you're not confusing YBS with Yorkshire Bank?

I too would like to know if @Growingold was eventually able to sort this out.

I was actually questioning myself as I wrote that about YBS! My mistake.

I'd like things sorted to prevent any issues if I want to transfer or repay withdrawn funds as they will have to go back in that ISA.

Growingold

masonic said:

Northern_Wanderer said:

So, my transfer of previous years allowance went through. I then got a letter from VM saying that as I had transferred current years subscritions, I'm unable to subscribe to my VM ISA until next tax year. VM by phonecall said I must contact recieving bank. Receiving bank says it is recorded as previous years subscriptions. I will go back to VM tomorrow. Not entirely sure what is going on.

Sounds like they've generously granted you a new 2024/5 £20k ISA allowance to use elsewhere.

Northern_Wanderer said:

Obviously YBS & VM are one and the same.....

I must have missed that. Nationwide was the building society that acquired VM. Are you sure you're not confusing YBS with Yorkshire Bank?

I too would like to know if @Growingold was eventually able to sort this out.

I am still waiting to hear back from the YBS ISA team.  As I said I had sent them a message and they replied not answering the specific query so I told them they had not addressed my query.  They said they would now refer to their ISA team and I would hear back within 5 working days.  Still nothing so chased them again.
I did do a test withdrawal of a small amount a couple of pounds after my partial transfer and this is showing as being able to be repaid back into the account but the amount withdrawn before the transfer took place isn't.  I will update when I finally get a reply.
I

Growingold

I have checked my account now and it is showing flexibility has now been restored on the amount withdrawn before the transfer but the amount isn't correct.. They have now included in the flexible balance the amount I transferred to the other provider.