ISA over £85K

Buzz017

My ISA will go over £85k if I transfer to a new ISA in 25/26.  My current provider doesn’t allow partial transfers.  So is my best option to transfer to a provider who allows partial transfers, keep the account for a short period then within the same finance year 25/26 transfer out partial amounts to 2 different ISA providers.  

Keep_pedalling

Is this a cash or S&Ss ISA? 

Buzz017

Cash Isa. 

refluxer

Buzz017 said:

My ISA will go over £85k if I transfer to a new ISA in 25/26..  

Can you explain what you mean by this ? If the ISA balance is currently below £85k, what is going to take it over that amount ? Is it interest that's due to be added or are you talking about adding another £20k from the next tax year's ISA allowance ?

If it's the latter, then you can simply open a new cash ISA elsewhere (with a different 'financial institution') for next tax year's ISA allowance to avoid this problem.

Mark_d

With all the current regulation on banks, how likely is it that your bank will go bust?  Lots of things are theoretically possible but do you need to cater for every possibility?

Albermarle

Mark_d said:

With all the current regulation on banks, how likely is it that your bank will go bust?  Lots of things are theoretically possible but do you need to cater for every possibility?

It is very unlikely a big bank will go bust, or be allowed to go bust. Personally I would not be getting too stressed about say having £100K with Nationwide, Nat West etc but I would keep under £85K with a smaller provider.

Buzz017

refluxer said:

Buzz017 said:

My ISA will go over £85k if I transfer to a new ISA in 25/26..  

Can you explain what you mean by this ? If the ISA balance is currently below £85k, what is going to take it over that amount ? Is it interest that's due to be added or are you talking about adding another £20k from the next tax year's ISA allowance ?

If it's the latter, then you can simply open a new cash ISA elsewhere (with a different 'financial institution') for next tax year's ISA allowance to avoid this problem.

The isa will go over £85k with added interest in the 25/26 finance year.  MSE advises to keep ISA’s below £85K as anything over isn’t protected.    My current ISA provider doesn’t allow partial transfers so I have to transfer the full amount into another isa that will soon take it over £85K.  

eskbanker

Buzz017 said:

refluxer said:

Buzz017 said:

My ISA will go over £85k if I transfer to a new ISA in 25/26..  

Can you explain what you mean by this ? If the ISA balance is currently below £85k, what is going to take it over that amount ? Is it interest that's due to be added or are you talking about adding another £20k from the next tax year's ISA allowance ?

If it's the latter, then you can simply open a new cash ISA elsewhere (with a different 'financial institution') for next tax year's ISA allowance to avoid this problem.

The isa will go over £85k with added interest in the 25/26 finance year.  MSE advises to keep ISA’s below £85K as anything over isn’t protected.    My current ISA provider doesn’t allow partial transfers so I have to transfer the full amount into another isa that will soon take it over £85K.  

So actually your ISA will go over £85k if you don't transfer it?!

Anyway, yes, if you'll exceed £85K by virtue of interest being added, and don't wish to do so (not unreasonably), and your current provider doesn't accommodate partial transfers, then yes, you'd need to arrange a full transfer to another provider (and then one or more further transfers to split it up) - this can all be done at any time unless the current ISA is a fixed term one that needs to wait until maturity for unpenalised access?

refluxer

Buzz017 said:

The isa will go over £85k with added interest in the 25/26 finance year.  MSE advises to keep ISA’s below £85K as anything over isn’t protected.    My current ISA provider doesn’t allow partial transfers so I have to transfer the full amount into another isa that will soon take it over £85K.  

OK, in which case then yes - if you want to split your ISA, then transferring to an ISA provider who allows partial transfers-out is going to be the solution to your problem. The good news is that the majority of cash ISA providers do allow this, but you'd just need to read the T&Cs carefully to make sure you avoid the few who don't (Zopa spring to mind but there will be others). Just make sure you're free to transfer away in full from the current ISA without a penalty and the new ISA would obviously have to be an easy access cash ISA in order to transfer-out again from there without paying a penalty for doing so.

I can't think of a reason why this would necessarily need to be done in the current tax year, other than wanting to keep within the FSCS limit ASAP. If you've paid into the ISA during the current tax year then there used to be a requirement to keep the current year subscriptions together but since the rules changed to allow multiple cash ISAs to be opened for current year subscriptions, then I would have thought you should be free to split the ISA however you like. Hopefully someone else will chip in if I've misunderstood how the new rules affect this type of scenario, though.

PeskyBlunder

Does your current provider have an ISA product which does allow partial transfers out? If so, then it might be slightly less hassle to transfer to this and then do the transfers to the new providers. I did this when my Charter fixed rate ISA got too big.

Buzz017

Thanks all.  The current ISA matures in May and I will look then to move it to a cash isa then part of it on to another fixed term isa.