SS to cash ISAs from April 2027

TMSG

I've read through a few pages about RR's 2027 changes to ISAs... I'm apparently fine as 65+ but the wife is not yet there. I take it that for me nothing changes, I can add £20k to a cash ISA or any other proportion. I also assume that after April 2027 I can still freely move £££ from cash to SS and vice versa?
The wife will be 63.75 come April 2027. So she will for at least one year, perhaps more, have to follow the new rules. NBD as she always puts something into her SS ISA though whether she'd be happy with £8k I can't say.
The thing that worries her (and me) is whether, once well and truly above 65, she'll be able to do as I presumably can do from the start and move cash from her SS ISA to a cash ISA. Probably these "small" details are yet to be determined... but perhaps it'd be wise to sell some investments and move the monies to a cash ISA anyway before April 2027... just to be on the safe side. We're anyway planning to sell some of the SS stuff as we're both now retired.

Alexland

ISA managers like to have standard processes so it's yet to be seen how many will support different rules for age 65 as it takes time and money to update their software and maintain the extra process complexity. Some may choose to just have the same more restrictive rules for everyone in some or all areas regardless of age as that's cheaper and simpler for them to operate with less chance of admin error.

There is no obligation on them to support all possible ISA features just the ones they choose to offer in their product terms and to meet the minimum features such as transfers-out etc. They can pick and choose what they agree to transfer-in some may just say no S&S ISAs or IF ISAs under any circumstances. There are already ISA managers who have chosen to have transfer-in restrictions. It's a business decision for them.

I still hope that the government will see sense under industry pressure and drop these ill-conceived changes.

jimjames

TMSG said:

 I also assume that after April 2027 I can still freely move £££ from cash to SS and vice versa?

I certainly wouldn't assume that. The rules are not confirmed but moving from S&S to cash was definitely being restricted in the proposals.

Aretnap

Alexland said:

ISA managers like to have standard processes so it's yet to be seen how many will support different rules for age 65 as it takes time and money to update their software and maintain the extra process complexity. Some may choose to just have the same more restrictive rules for everyone in some or all areas regardless of age as that's cheaper and simpler for them to operate with less chance of admin error.

There is no obligation on them to support all possible ISA features just the ones they choose to offer in their product terms and to meet the minimum features such as transfers-out etc. They can pick and choose what they agree to transfer-in some may just say no S&S ISAs or IF ISAs under any circumstances. There are already ISA managers who have chosen to have transfer-in restrictions. It's a business decision for them.

I don't think this is likely to be a major problem in practice.

True, cash ISA providers would be free not to accept transfers from S&S ISA - they don't have to accept transfers in at all.

However the S&S ISA provider would still presumably be obliged to allow the transfer out, assuming the customer was old enough for the transfer to be legal. ISA rules require providers to allow transfers out - holding customers money hostage is slightly frowned upon by the regulators.

So you would definitely be able to transfer from a S&S ISA to a cash ISA after you are 65. Not necessarily your current cash ISA or the one at the top of the best but tables - but some providers at least will offer the facility if there is demand for it. And once it's in cash ISA A, transferring it to cash ISA B will be as simple as any other cash ISA to cash ISA transfer, so getting it into your preferred account will just require an extra step, at most.

Aretnap

jimjames said:

TMSG said:

 I also assume that after April 2027 I can still freely move £££ from cash to SS and vice versa?

I certainly wouldn't assume that. The rules are not confirmed but moving from S&S to cash was definitely being restricted in the proposals.

Nothing is certain except death and taxes, however as assumptions go, the assumption that cash to S&S ISA transfers will still be allowed from everyone is a fairly safe one. Given that (a) the stated aim of the changes is to encourage more S&S investing and (b) they were allowed under the pre-2014 rules which are now being dusted off and reintroduced.

And it has already been announced that transfers from S&S to cash will still be allowed for the over 65s, so it's an even safer assumption to say that you'll still be able to do that, assuming the OP doesn't accidentally drink from the fountain of youth in the meantime.

Alexland

Aretnap said:

However the S&S ISA provider would still presumably be obliged to allow the transfer out, assuming the customer was old enough for the transfer to be legal. ISA rules require providers to allow transfers out - holding customers money hostage is slightly frowned upon by the regulators.

Yes S&S ISA providers won't be able to stop transfers-out it's a question of which Cash ISAs will accept the transfers-in for age 65+ .

Aretnap said:
(a) the stated aim of the changes is to encourage more S&S investing

And in their muddled thinking they have made S&S ISAs less attractive and are going to cause those of us using money market funds to have to put more into Cash ISAs with the inconvenience of keep moving them around to keep the rate acceptable. It also stops S&S investors from using sensible methods of reducing risk as they get closer to withdrawal by moving higher proportions of the account valuation into cash-like investments.

It's an extremely irritating and ill-conceived change. If they wanted to encourage more people to S&S invest, where appropriate, they should have lead with education not restrictions making the ISA landscape worse.

TMSG

Thanks all for your input. All the sources I've consulted suggest that for 65+ "nothing" will change. Now given that the plans are sketchy and IMO not well thought through and given that the devil is in the detail this doesn't mean much. However we've got to plan with the little information we have (these people expect us to plan ahead and to look after our retirement and then go and create a UK-sized half-baked lasagne).

Transferring out from SS to cash is always possible but of course we don't want to lose the tax-free status. The actual receiving bank and their rate is not that important as we can always move on... the tax-free status is the thing.

As @Alexland has said this whole thing may well make SS ISAs less attractive... if handled badly some people may even start a wholesale dumping of their SS holdings just to make sure they can access the funds tax-free later on.

Oh well...