ISA transfer by manually withdrawing

Charzhin0

I cant find an answer to my specific situation on any website that deals with ISA ''transfers'' so I'll ask it here:

I have 2 ISAs; 1) Hargreaves Lansdown 2) IBKR

I recently opened my IBKR ISA about a year ago. I've had my HL for 4 years. Reason I opened IBKR ISA is because the fees are much cheaper and investment markets more expansive, so since I opened IBKR ISA, all my contributions are/will be going into this platform. 

I have a cash balance of £10k sitting in my HL right now. The rest is in securities which I dont want to transfer or sell. I only want to transfer my £10k to my IBKR isa. I have not contributed anything to my HL for the current tax year. I have been contributing regularly to my IBKR isa throughout the current tax year. 

My decision point is currently this.... I want to withdraw the £10k from my HL manually to my bank account, then deposit that £10k from my bank account into my IBKR ISA (assuming I will be under the ISA max contribution limit). Is there any problems if I do this, in regards to breaching isa tax limit rules or anything like that? i./e if I withdraw that £10k then is my ISA limit going to be reduced by that amount so therefore cannot deposit this into my IBKR ISA?

Or can I simply do the above and carry on as normal once the money settles into my IBKR ISA.   

Exodi

You have a £20k annual contribution limit for all ISA accounts and resets with the tax year in April. 

While you mention you have not contributed anything to HL - how much have you contributed to other ISA's?

If you have contributed £20k already to IBKR, for example, then you would be over the annual limit by depositing another £10k.

If you only expect to contribute £10k or less across all your ISA's, then it's not a problem to withdraw the £10k cash and depositing it in your other ISA (but to be clear, this would also count as £10k against your limit). If you expect to contribute more, do a proper transfer using their process.

Charzhin0 said:

if I withdraw that £10k then is my ISA limit going to be reduced by that amount so therefore cannot deposit this into my IBKR ISA?

I didn't really understand this question. ISA's allowances are based on contributions, not withdrawals. Withdrawing the money has no impact on your ISA allowances, but putting it into a new account would.

Robin9

Don't withdraw the cash - simply transfer to IKBR.

Complete a IKBR transfer form -  HL will reply asking what do you want transfer and you can select cash / share value or whatever mix you want.

ISA transfers do seem to take a long time.

Exodi

Robin9 said:

Don't withdraw the cash - simply transfer to IKBR.

Complete a IKBR transfer form -  HL will reply asking what do you want transfer and you can select cash / share value or whatever mix you want.

ISA transfers do seem to take a long time.

While I agree in general, if OP is expected to be under the annual allowance even considering depositing the £10k manually, then there's not many compelling reasons to deliberately use the transfer process, which, as you mention, can often take several weeks.

Ayr_Rage

As long as

(Funds already added to IBKR ISA) + (Funds added to other ISAs) + (£10,000 removed from HL and added to IBKR) is less than £20,000 for the current tax year then your plan works.

If the securities in HL that you don't want to sell can be transferred IN SPECIE along with the residual cash using an ISA transfer initiated by IBKR (if permitted) and therefore means reduced fees why not do that?

That way you retain your full ISA allowance for the year, it is not eaten into by that £10,000 that comes out of HL and goes into IBKR as "new" money.

twopenny

I opened a low paying ISA account, transferred the money to there then transferred a portion of it to an existing ISA keeping the remainder in the easy access for essentials I need.
Would that work or am I not fully understanding the question.

The move to easy access (bank branch) was quick, a few days.
The proportion moved to a higher age paying longer held one was a week or two.
I only lost a little interest on the moved amount and made up for it with the established ISA and getting everything where I wanted it.

FrugaiMacDugal

If you withdraw from HL you will lose the ISA cover, best to get IKBR to start the transfer.

You say 'I recently opened my IBKR ISA about a year ago,' so that would be tax year 24/25.

Then you say, ' I have been contributing regularly to my IBKR isa throughout the current tax year,' so that's tax year 25/26.

So, have you got 3 ISAs?

Charzhin0

FrugaiMacDugal said:

If you withdraw from HL you will lose the ISA cover, best to get IKBR to start the transfer.

You say 'I recently opened my IBKR ISA about a year ago,' so that would be tax year 24/25.

Then you say, ' I have been contributing regularly to my IBKR isa throughout the current tax year,' so that's tax year 25/26.

So, have you got 3 ISAs?

No I only have 2 current active ISAs, HL and IBKR with open positions in both. I opened my IBKR ISA in mid 2024, and stopped contributing to HL once I opened that, and instead contributed into my newly opened IBKR ISA until end of tax years 2024/2025. Then from this new current tax year, I've continued only contributing to the aforementioned IBKR ISA and avoiding HL, so my £20k ISA limit is only going to be put into IBKR ISA. Which is why I wanted to ask if pulling out £10k from HL where (I havent deposited since June 2024) and putting into IBKR, would affect my tax isa allowance.  

Charzhin0

Thanks for the feedback guys, I think I may as well just get it over and done with and transfer the whole HL isa + cash to IBKR, even though it may take a while.