Transferring cash from one cash ISA to two cash ISAs.

Belenus

We are a retired couple with decent pensions and plenty of savings. We are both standard rate
taxpayers.

My wife has a Trading 212 Cash ISA of about £26,000 currently earning 3.6 %.

We want to withdraw that £26,000 and place it into two new cash ISAs of £13,000, one in
my name and one in her name in order to achieve more than 3.6% interest.

We are considering Chip which pays 4.42% (3.75% variable + 1yr 0.67% newbie bonus). I
closed my Trading 212 cash ISA last year so I don't qualify for their newbie bonus.

We need the flexibility of penalty free withdrawals and do not want a fixed term ISA.

We had planned to withdraw the £26,000 to our bank and use that to open the new ISAs
until I read this here on MSE.

• If you want to
  transfer, don't withdraw your cash and transfer it manually. You'll
  lose all tax benefits if you do. Instead, speak to the new provider
  and fill in an ISA transfer form. Your new provider will then move
  the money over for you – keeping your ISA cash permanently
  tax-free.

What tax benefits will we lose? My wife has only used £700 of her £20,000 allowance. I
have used none.

I presume that advice refers to those who plan to transfer more than £20,000 per person
into new ISAs in which case I understand they will lose the tax benefits above £20,000.

Surely our £13,000 each will still be tax free this year? We are very unlikely to exceed
£20,000 each this tax year.

Am I correct?

Comments and advice please.

Thank you.

Woodstok2000

Your understanding is correct, however why not just transfer the whole lot into one (or two) new chip ISAs without withdrawing it? Then you don't use any of your allowance, just in case you need it later in the tax year.

QrizB

why not just transfer the whole lot into one (or two) new chip ISAs without withdrawing it?

People have reported problems transferring ISAs out of T212 due to T212's account management arrangements.

Also, I don't know if T212 can make partial transfers.

Also also, I don't think you can't transfer from an ISA into an ISA under a different name. So no transfers from Mrs Belenus to Mr Belenus.

Belenus

https://forums.moneysavingexpert.com/discussion/comment/82043794#Comment_82043794

Thank you for your reply.

We had planned to leave a small amount in the Trading 212 ISA in case things change in the future.

I also understand that transfers can be problematic and take time whereas withdrawing cash from Trading 212 is more or less instantaneous, or has been for the relatively small amounts we have withdrawn in the past.

As I understand it, we can't transfer from my wife's ISA into a new ISA in my name so it would need to be one ISA in my wife's name only. We prefer to have one each.

sausage_time

Also, I don't know if T212 can make partial transfers.

They can.

I also understand that transfers can be problematic 

Took just a few days from T212 to Santander in April.

friolento

If your wife withdraws £26,000 from her T212 ISA (or from any ISA), it will lose its tax free status.

If she then deposited any of the £26k into another ISA, it would count against her current year's ISA allowance. Which is only £19,300 now, as you say she has already used £700 of it.

The way to move ISA money without it losing its tax free status is to ask the new provider(s) to perform an ISA transfer. That way, your wife's money won't lose its ISA status, and she won't use any of her current year's ISA allowance because of the transferred money.

Belenus

Thanks everyone for your responses and advice.

We decided to avoid the albeit probably small risk of problems or delays with doing an ISA transfer from Trading212 to Chip.

Today we have withdrawn most of the money in my wife's Trading ISA to our joint bank account and opened up an ISA in each of our names with Chip.

It doesn't really matter to us that we are losing the tax free status of that money as we will be well within our £20,000 each allowance this financial year.

We have left some money in her Trading212 ISA.

I hope you are all surviving the heat.

Thanks again.