Transfer Cash ISAs Discussion Area

rpb424

Thanks guys.

I also have a Nationwide FlexPlus current account. It's definitely worth keeping that with a balance of at least £2500 as it currently pays 2.4% net on any balance up to that amount (but nothing on any excess over that), which beats most ISAs anyway.

alahol2

rpb424 wrote: »

My question is basically is this actually against HMRC rules, and could you get in trouble for doing it, or is the 'never do it' advice only given to stop the unwitting from losing the tax free status?

No, it's not against any sort of rules and you won't get into trouble for doing it. It actually makes perfect sense. Money in an ISA is your money. If you withdraw it you can do with it what you will. If you choose to invest it in another ISA That's perfectly OK.


The advice about not trying to transfer cash between ISA's by withdrawing and re-investing is purely to avoid losing tax free status by misunderstanding the rules.

rpb424

Thinking about it, when the new vastly increased £15k subscription limit for cash ISAs kicks in from July, then the decision as to whether to opt for an ISA which allows transfers in or not becomes somewhat simpler for quite a few people with lower level savings and subscription rates. If you can predict with certainty that you'll never reach your £15k limit within a year by whatever means then you can choose a 'no transfers' ISA and simply transfer the money in yourself anyway, loss of tax free status won't matter.

I actually rang the HMRC yesterday to confirm once and for all that I was safe transferring between ISAs like this and the answer was an unequivocal 'yes'. Once money has been taken out of the ISA system (loss of tax free status noted) you are free to do with it as you please, including put it straight into another ISA (subject of course to your overall subscription limits for the year).

Matilda

livz99 wrote: »

Thanks guys, now, if only there were any decent ISAs which allowed transfers...

First Direct is offering a good rate if the ISA you want to transfer has £10,000 or more - 1.70%. If you have £20K in your ISA then it's 1.85% and for £40K it's a very respectable 2.00%. You will have to open their 1st Account (a current account) but you don't have to do anything much with that - you can still keep your usual current account. You get instant access too.

http://www1.firstdirect.com/1/2/savings/cash-isa?WT.ac=FSDT_CTA_SAV_CISA1002

Archi_Bald

Matilda wrote: »

First Direct is offering a good rate if the ISA you want to transfer has £10,000 or more - 1.70%. If you have £20K in your ISA then it's 1.85% and for £40K it's a very respectable 2.00%.

Those rates are, like literally all cash ISA rates, shocking. You might just about keep up with inflation on the 2%, but you certainly won't make much gain, and on the lower ones you are making a guaranteed loss.

katsmum22

Just heard yesterday that First Direct NISA interest will drop in October so I need to find somewhere else to invest my savings. I am looking at the Santander 2 year fix which only accepts deposits until the end of August. My question is if I open one of these by transferring existing funds and pay in say £7000 new money can I open a second account with them and drip feed the balance up to £15000 during the year

rachelcward

The advice about not trying to transfer cash between ISA's by withdrawing and re-investing is purely to avoid losing tax free status by misunderstanding the rules.[/QUOTE]

How do I transfer a maturing ISA to another ISA product as alternative to it being paid into my bank account?

colsten

You find a cash ISA that allows transfers in, then fill in the transfer form of the new provider. The will do the rest.This is the official transfer route.

A lot of the ISAs with the best interest rates do not allow transfers in. Thus, if your existing ISA plus any new money you want to put into an ISA is less than £15,00, you could ignore the transfer altoget. In this case just withdraw the balance from your old ISA and put it into a new one. Or even ignore ISAs and keep your money in better interest paying current accounts until ISA rates have improved. It really all depends on the amount of money you have.

Orinoko

I have some money in an old ISA maturing in November, with all this talk about withdrawing the money temporarily or even for a while into a normal tax paying current/savings account I was wondering what would actually happen?

I have quite a reasonable sum of money, if I transfered it to a savings account that I pay tax on, would I immediately be taxed at 20% on the whole amount? When/if do you pay tax on the transferred ISA amount and is it best to do it quickly?

Id appreciate if someone who has actually done it could tell me their experiences :beer:

colsten

You only pay tax on the interest your money earns outside a cash ISA, not on the money itself.

For example:
£10,000 in a 3% AER account pays £240 interest a year after BR tax. BR tax is automatically withheld by the provider. A BR tax payer will not have to pay additional tax on this. Somebody you doesn't have to pay tax can claim the tax back and make £300 a year.

£10,000 in a 1.5% AER ISA pays £150 interest a year.