Transfer Cash ISAs Discussion Area

Angie_B

Hi. I have a Coventry building society Privilege ISA (i.e. I've been there for over 5 years so should technically get a slightly better rate than the non-privilege ISA). The rates are not great right now (1.2%) and I'm looking to open a new ISA. The Abbey £9k+ ISA is quite appealling but my main question is, can I transfer some money from my Coventry ISA but not all of it?

For example, say the Coventry ISA had £12k in it, could I transfer £9k from there into a new Abbey ISA and add my £3,600 allowance in (I haven't used any of my 09/10 allowance yet) or do I have to transfer everything? The reason I ask is because it is a Privilege ISA, if/when rates go up again the Coventry ISA could well go back to being one of the leaders and I don't want to lose my 'Privilege' status.

Thanks!

rb10

Angie_B wrote: »

Hi. I have a Coventry building society Privilege ISA (i.e. I've been there for over 5 years so should technically get a slightly better rate than the non-privilege ISA). The rates are not great right now (1.2%) and I'm looking to open a new ISA. The Abbey £9k+ ISA is quite appealling but my main question is, can I transfer some money from my Coventry ISA but not all of it?

For example, say the Coventry ISA had £12k in it, could I transfer £9k from there into a new Abbey ISA and add my £3,600 allowance in (I haven't used any of my 09/10 allowance yet) or do I have to transfer everything? The reason I ask is because it is a Privilege ISA, if/when rates go up again the Coventry ISA could well go back to being one of the leaders and I don't want to lose my 'Privilege' status.

Thanks!

Yes, you can do that, provided that neither Coventry or Abbey specifically prohibit it in their T&Cs.

Whether it is worth doing, however, is a different matter. Is it worthwhile to have £3k sitting in a very low interest account now, to (potentially) get a higher rate later. I would expect that it would be best to put the whole lot in Abbey, because you would now be getting 1.8% (3-1.2) less than you could be getting, if the money was in Abbey. So is it really likely that Coventry will have a rate for 'privilege' customers that is 1.8% above the market leader in the future? This is what you require to balance it out.

MarkyMarkD

cottager wrote: »

I agree, some of this wording seems senseless.

Like wytco0, last month I was transferring ISAs (from previous years only) to the Cheshire, and their application form kicks off with the statement:
I apply to subscribe for a Cash ISA for the tax year 2009/2010 and each subsequent year until further notice.

Clearly (as I thought) this wasn't the case, so I crossed out a section in the middle so that it read instead:
I apply to subscribe for a Cash ISA until further notice.
It went off with a covering letter explaining the reason for the alteration, i.e. I wasn't subscribing for the current year (because I'd already done so elsewhere), only to TF in previous years.

In due course a letter from Cheshire:
... Unfortunately we are unable to accept the form as essential information has been altered. The sentence 'I apply to subscribe to a Cash ISA for the tax year 2009/10 and each subsequent year until further notice' has been crossed out and so the form is now invalid. This line is essential to the form and is placed there through Inland Revenue regulations. The sentence means that should you wish to, you may subscribe to your ISA account for this and subsequent consecutive tax years without the need for completing more applications. It does not oblige you to subscribe in this or any other tax year. Please find enclosed a new application form for your completion and signature ...

So we had to start again :rolleyes:

The Revenue standard wording is silly, but it is no harm to leave it as it is, on the application forms. If you do not do so, the provider has to keep a record that you've altered it - and this is a completely pointless faff for them.

The reason they want you to say, up front, that you subscribe for 2009/10 and subsequent tax years is because this ALLOWS but does not REQUIRE you to subscribe in 2009/10 and subsequent tax years.

If they allow you to cross out all of that, then they would have to write to you for a "missing ISA subscription" declaration if, in due course, you changed your mind about funding for 2009/10 or 2010/11.

The Revenue clearly didn't think very hard about the wording and have not updated it either, to reflect the way ISAs are actually operated by taxpayers and financial institutions.

cottager

Thanks for taking the trouble to explain fully MMD.
Yes, it's the 'ALLOWS but not REQUIRE' part which is the odd bit to get your head around, as we know we must not subscribe to more than one ISA in a tax year; yet this particular statement, because of the way it's worded and the way it doesn't fit the transfer-only or 'already subscribed this year' scenarios, seems to encourage us to do just that, or essentially sign to an untruth

Having tripped up and fallen foul of it once I'll obviously remember and never do it again... but much better if it was looked at and updated to avoid confusion.

So by the same token and taking it further: even though I've already subscribed to an ISA for this year, I could for example open three more new variable-rate ISA accounts with different providers now but leave them all empty; then fill one when we go into 2010/11 and still leave 2 empty; fill another in 2011/12, etc?
Not that I can think of any logical reason to do this, but in theory I mean!

Baldur

cottager wrote: »

So by the same token and taking it further: even though I've already subscribed to an ISA for this year, I could for example open three more new variable-rate ISA accounts with different providers now but leave them all empty; then fill one when we go into 2010/11 and still leave 2 empty; fill another in 2011/12, etc?
Not that I can think of any logical reason to do this, but in theory I mean!

Theoretically, but:

1. As you say, there would be no point in doing so, as rates would be likely to be bettered by the time that you wished to subscribe your allowance.

2. Cash ISA accounts 'lapse' (i.e. your ability to make subscriptions to them without a new declaration) if no subscription is made to them for a full tax year , so you'd have to re-apply in subsequent tax years in any event.

MarkyMarkD

^^^ what Baldur said.

You can only open them one tax year in advance; if you open in 2009/10, and fund in 2010/11 that is OK; if you open in 2009/10 and fund in 2011/12 you will have to fill in a missed subscription form (basically a new ISA app form) for 2011/12.

The rules are all pointless and HMRC didn't think when they set it up. Given that what matters is the correct subscription - to just one ISA simultaneously - all the paperwork should read completely differently to what it does.

cslogg

I am not much of an expert in these matters but I have a couple of questions.
I have a M&S ISA containing £3600 + interest that ends in March and a Barclays ISA containing £5100 +interest that ends in April.Can I transfer the M&S one now to a bank that accepts transfers and then in April transfer the Barclays one into the same account?This would give me around £9000 in one ISA.
Is this allowed/advisable.I was thinking of putting into one of the one fixed ISAs like Julian Hodge or United Trust Bank.
Any help with this would be welcome,even if I do not like the answer.

Baldur

cslogg wrote: »

I have a M&S ISA containing £3600 + interest that ends in March and a Barclays ISA containing £5100 +interest that ends in April.
Can I transfer the M&S now to a bank that accepts transfers and then in April transfer the Barclays one into the same account?T

As long as there are no clauses in the respective accounts' Terms & Conditions limiting inward and outward transfers in any way, you can transfer as many Cash ISA accounts as you like into one.

cslogg

Thanks for that Baldur.
Does it actually matter when I transfer?Or can I do both now.

cslogg

Baldur

cslogg wrote: »

Thanks for that Baldur.
Does it actually matter when I transfer?Or can I do both now.

You can transfer at any time, subject (as I said above) to any limitations/restrictions in the Ts & Cs of the old/new accounts.