TOISA/cash ISA?

zzzLazyDaisy

I have a 5 year TOISA due to mature next March.

I know it is too early to make definite decisions, but I just wanted to be sure of my options.

Am I right in thinking that I will be able to transfer the full amount to a cash ISA, if I wish? Provided, of course, that the ISA takes transfers in.

Thanks

Chadsman

TOISAs dont have a time limit unlike TESSAs. If you tansfer the funds to an ISA rather than a TOISA you will use up your allowance for the current tax year. It sounds like you had a fixed rate TOISA which is now nearing the end of its fixed rate period ???

As I understand it...
...all the funds in the TOISA (capital and interest) will continue to be tax free once the fixed rate period has ended (unless there was some VERY weird clause in the T&Cs that said it would be transfered out of the TOISA wrapper at the end of the fixed rate term, but I cant imagine any bank/BSoc being that daft). It is usual at the end of fixed rate periods on ISAs/TOISAs to be able to withdraw or transfer the money as you see fit.
I would contact your current provider to ask what rate you will get when the fixed rate expires and might there be any similar products available?

HTH,

zzzLazyDaisy

Hi, yes it is a five year fixed rate Toisa.

Maisie

My husband has a TOISA. When the 5 year period ended he just left the money in the TOISa. It gets about the same rate as an ISA. You can withdraw the money if you want.

You can then have a TOISA and an ISA. Handy if you want to invest more money tax free. But as I see it you can't put any more money in a TOISA.

I don't know if you can transfer a TOISA.

cheerfulcat

zzzLazyDaisy wrote:

I have a 5 year TOISA due to mature next March.

I know it is too early to make definite decisions, but I just wanted to be sure of my options.

Am I right in thinking that I will be able to transfer the full amount to a cash ISA, if I wish? Provided, of course, that the ISA takes transfers in.

Thanks

Yes, you may transfer the ToISA into an ISA. This does not affect your ISA allowance.

HTH

Cheerfulcat

isasmurf

Technically, there is no such thing as a TOISA anymore. The TOISA name is now only used as a marketing term by banks and building societies.

HMRC recognises all TOISAs as cash ISAs and do not distinguish between the two. Therefore, as cheefulcat said, you can transfer it to any cash ISA just as you can transfer any other Cash ISA around without it affecting you allowance.

realaledrinker

There is still widespread confusion about this. I went into a branch of the Yorkshire BS today and was told quite categorically that I could not transfer my TOISA with IF into their ISA. Only to another TOISA.

isasmurf

The YBS staff was wrong (unless they were referring to their own products). Generally "TOISAs" are allowed to be moved into the Cash ISA.

If you look at any of HMRC's literature these days you will have noticed they have removed all references to TOISAs. I doubt they would have done this if there were still special conditions set with TOISAs (i.e. that you had to transfer to another TOISA).

HMRC have no way of identifying a TOISA after the year in which the original transfer from TESSA to ISA was made.

It might help if I explain how HMRC make sure that you follow the rules.
Each year your ISA manager sends details of your ISA to HMRC. This details the type of ISA it is, the amount deposited in each component (Stocks & Shares or Cash) and the total balance of the account (if cash) or market valuation (if Stocks & Shares). Now there was a special indicator to indicate if the account was a TOISA. HMRC notified ISA managers that the special indicator was being removed from this year, therefore managers will not be reporting if an account is a TOISA. In any case, the ISA manager only reports if it was a TOISA in the year in which the original transfer from TESSA to ISA took place. In subsequent years the ISA is simply marked as a 'dormant' ISA. The value of the 'TOISA' is displayed in the Cash component. Similarly a Mini Cash ISA with no deposits during a tax year will also have the value of their account shown in the Cash component and be marked as dormant. Therefore the taxman cannot distinguish between Mini Cash ISAs and TOISAs where no new money has gone into the account.

In addition, paragraph 3.16 of the PEP and ISA Managers Guidance Notes states "The type of ISA (mini, maxi or TESSA only) applies in the tax year in which a subscription is made, but may continue into later years if further subscriptions are made to that ISA. If no subscriptions are made in the following year the prior year ISA retains its identity as a stocks and shares, cash or insurance component, but loses its designation as a maxi, mini or TESSA only."

So I hope from this you can see that moving a TOISA into a Mini Cash ISA shouldn't cause any problems.

ianonline

I can see that this may cause confusion if you have a cash ISA and a TOISA which you subscribed to for the same tax year and you want to transfer them both to a new provider. To all intense purposes you have two cash ISAs originally subscribed to for the same tax year and you want to transfer them both into a new cash ISA - I can see this causing meltdown on some bank / building society's computer systems (or staff simply refusing the transfer on the grounds that it is "not possible" - judging by realaledrinker's experience with YBS it appears that some bank / bs staff may not be as fully clued-up on the rules as they should be)