Transfer Cash ISAs Discussion Area

asajones.24

Hi,
I don’t understand the MSE article when it says that some banks like Santander don’t accept transfer cash ISA money into a new cash ISA account.
Isn’t that easy to get around: by just transferring money out of your existing ISA into your current account then transferring the money into the new ISA?
I don’t get it.
Do you mean you can’t transfer a full existing ISA amount to a new one?
Thanks very much,
Asa.

Lokolo

asajones.24 wrote: »

Hi,
I don’t understand the MSE article when it says that some banks like Santander don’t accept transfer cash ISA money into a new cash ISA account.
Isn’t that easy to get around: by just transferring money out of your existing ISA into your current account then transferring the money into the new ISA?
I don’t get it.
Do you mean you can’t transfer a full existing ISA amount to a new one?
Thanks very much,
Asa.

If you do it that way you are using your allowance up when you don't need to.

For example:

Year 1 I deposit £5,000 into a Cash ISA.
Come Year 2 I can deposit a further £5,000. So I now have £10,000 and have £340 left of this years allowance.

However instead of depositing a further £5,000 I go to Santander, I withdraw the £5,000 from the old Cash ISA and deposit it in Santander. I now only have £5,000 in ISAs and I only have £340 left of my yearly allowance.

MarkyMarkD

Lokolo wrote: »

They can do either, depending on how you do the process. Although the likelyhood is that you will open 1 account, fill in 2 transfer forms, in which case, they will lump it together in one account.

There's no such thing as a "2010/11 ISA" or a "2011/12 ISA". There is an ISA, which is the account, and which can contain funds from one or more tax years.

The only distinction that matters is between current tax year, and prior tax year, funds. Once the tax year ends, the funds become "prior tax year funds" and it's irrelevant which year they were subscribed.

The distinction re current year funds is just that you cannot partially transfer current tax year funds.

Lokolo

MarkyMarkD wrote: »

There's no such thing as a "2010/11 ISA" or a "2011/12 ISA". There is an ISA, which is the account, and which can contain funds from one or more tax years.

The only distinction that matters is between current tax year, and prior tax year, funds. Once the tax year ends, the funds become "prior tax year funds" and it's irrelevant which year they were subscribed.

The distinction re current year funds is just that you cannot partially transfer current tax year funds.

Never said there was but some accounts only allow one deposit (such as fixed term deposits), so if you transferred both, they would go into separate accounts, such as Aldermore did when I had a fixed year account, they opened 2 and put each transfer in each. Whereas sometimes you can get it all lumped together.

System

asajones.24 wrote: »

Hi,
I don’t understand the MSE article when it says that some banks like Santander don’t accept transfer cash ISA money into a new cash ISA account.
Isn’t that easy to get around: by just transferring money out of your existing ISA into your current account then transferring the money into the new ISA?
I don’t get it.
Do you mean you can’t transfer a full existing ISA amount to a new one?
Thanks very much,
Asa.

As others have already said, if you transfer the money from the old ISA via your current account, then you lose the benefit of the tax free wrapper and it would be treated as new money deposited into your new ISA which would use up this years tax free allowance.

To transfer funds between ISA accounts you must use the official transfer process by completing an ISA transfer form that you get from your new ISA account provider

leaphaze

Lokolo wrote: »

They can do either, depending on how you do the process. Although the likelyhood is that you will open 1 account, fill in 2 transfer forms, in which case, they will lump it together in one account.

It also depends on the provider. Halifax, for instance, won't let you open more than one ISA per year. I discovered this a few weeks ago. I opened an ISA with Halifax then transfered from another provider. I have a futher ISA which I wanted to transfer to Halifax but keep separate, but Halifax wouldn't let me create another ISA. Solution: transfer into the first ISA and use a spreadsheet to keep the two pots separate and apportion the interest between the two.

leaphaze

asajones.24 wrote: »

Hi,
I don’t understand the MSE article when it says that some banks like Santander don’t accept transfer cash ISA money into a new cash ISA account.
Isn’t that easy to get around: by just transferring money out of your existing ISA into your current account then transferring the money into the new ISA?
I don’t get it.
Do you mean you can’t transfer a full existing ISA amount to a new one?
Thanks very much,
Asa.

Asa, just to try to nail down tightly what has already been said:

Your existing ISA has consumed some ISA allowance in the past. Once consumed, your ISA allowance is gone forever, even if you withdraw your money. By cashing in your ISA and paying that same money into another ISA, you're consuming further ISA allowance (so each £1 has now used up £2 of allowance, although that allowance may come from different years).

You don't quote any values so it's difficult to work out if you're losing out or not. If you didn't intend to use this year's allowance, then your approach makes sense. However, if you do intend to use this year's allowance, you need to consider whether you'll run out of allowance due to your approach.

iwant2asave

Hi,

For fixed rate ISAs from previous years that end soon, what is the correct way to transfer them to a new provider and minimising loss of interest (e.g. maturity date = 29/8/11, is there a way to get the transfer to happen that same date). Thanks,

Sam

DragonQ

The correct way to transfer ISA money is to use an official ISA transfer form from the bank's website. For example, here's the page you need if you're transferring an ISA to Halifax. It has a link to the transfer form and the address you need to post it to once you've filled it in. Note that you usually have to open the ISA before sending your new bank a transfer form - this could take weeks if they request evidence so it's usually easiest to do this in-branch.

The new bank has to pay you interest from the date they receive the ISA transfer form so you can just post it a couple of days before your current ISA rate drops/expires (or just drop it into your branch on the day).

Sarah1909_2

Is there a best time to transfer a cash ISA? Would it be best to wait until just before or just after April?