Full ISA Guide Discussion Area

System

Mikeyorks wrote: »

You're totally wrong. Sections 12.30 to 12.33 are completely free standing and reference 'self transfers. The only reason self transfer is still in that section on Voiding and repair is (12.32a 2nd para) that a :



The example at 12.33 is wholly clear - so I'm curious why you're defending the indefensible. The fact the 1st self transfer is valid is stated at 12.32 / 12.32a and 12.33.



No more of a false declaration than anyone transferring by using the more normal method of an application form / transfer form via the new provider. If you answer 'Yes' to that question on the application .... you don't get a new ISA. So you scrawl 'Transfer' across it or you take it in and they answer / accept 'No'. Because - at the end of the day - it isn't a new ISA. It's just the original - that will move providers.
A self transfer is no different - it's just that you're moving the original but on a DIY basis.


There would be no in-year transfers were that the case. As the account being transferred from is 'closed' as soon as it is empty. And - in the self transfer case - the subscription does not use up part of the allowance. You have to close the account in entirety - so you are allowed to subscribe the full current year allowance to the new ISA you open.



12.32 / 12.32a and 12.33 have all been amended to reflect exactly that.

Your understanding of the English language is obviously different to mine.

You are ignoring the words in the HMRC guidelines to suite your argument but you are failing to acknowledge the fact that the HMRC guidelines say you are breaking the rules if you close a Cash ISA and then use the "self transfer" section with example which in the contents has a title of : ".......... Repairs – self transfer .......................... 12.30 to 12.33"

You will forgive me for not accepting, what you as an individual, seem to think is gospel or "indefensible", because I disagree with your description of the guidelines.

ISA Transfer rules are defined, so if you follow those rules, that negates your attempt to use that to justify making a false declaration to try to get away with making a mistake of closing the old account and doing a "self transfer".
In fact, when you open an account which you intend to use to transfer current years subscriptions into, you should answer "yes" to the question - that you have subscribed to another Cash ISA, because that informs the new account provider that the ISA allowance will have been partially (or wholly) used by the subscriptions to the old transferred account.

You cannot falsely answer "no" to a simple question and then argue it is okay to give a false answer.
Yes, the rules are stupid or at best misleading, but they are the rules that currently exist, so to tell people it is okay to break those rules is wrong, the best advice should be to negotiate with HMRC to persuade them to change the rules and re-word the declaration(s) on the ISA application so that this scenario is made possible and clear.

Yes, sections 12.32, 12.32a & 12.33 have been amended / added to say that HMRC will now allow this "self transfer" if an investor makes the mistake of closing the old account and then tries to deposit into a new account. But, they have not said this is normal practice, and it will require HMRC to investigate that individual's ISA subscriptions by checking the ISA reports from two different providers.

If you want to ignore these facts then I understand, but other MSE members need to know the rules as they are currently written

AirlieBird

I'm going to have one last go to convince you. So far the guidance has been quoted, but guidance is just that - guidance. So, let me refer you to what is in legislation.

The Individual Savings Account (Amendment No 3) Regulations 2002 state that where an account is closed and a second account is then opened the "first later account" "is eligible for relief" and "shall be treated, as from the date of the first subscription... in the same manner as the first account."

The explantory note relating to this amendment says exactly yhe same thing as I quoted earlier from the Regulatory Impact Assessment.

Edited to add: The amendments in the same piece of piece of legislation introducing "repairing" state that the condition relating to repair of a "first later account" will only apply between April 2001 and 5 April 2003. After that the bit I've quoted above applies.

System

Yes, that clarifies that the regulations have been changed to allow an investor to self transfer once in each year. If HMRC updated their guidance notes to correspond with that legislation, then it would become clearer for everyone, but at this point, the HMRC guidance notes are misleading because of the contradictory terms used in various different sub-sections.

HMRC / the regulatory bodies also need to tell ISA providers to change the application forms so that it is possible to give accurate answers to the declaration questions.
i.e.
The particular declaration question needs to be amended to include this scenario for self transfer.

Mikeyorks

BAA1 wrote: »

In fact, when you open an account which you intend to use to transfer current years subscriptions into, you should answer "yes" to the question - that you have subscribed to another Cash ISA, because that informs the new account provider that the ISA allowance will have been partially (or wholly) used by the subscriptions to the old transferred account.

Apart from your misreading of the HMRC guidance - where reference to 12.32a and 12.33 (example) covers all you need to know about the validity of self transfer - you seem to have a fixation about the response on the application form?

Consider the situation where someone fully subscribes to a cash ISA. Later has second thoughts and transfers that to a S&S ISA. Then has an unexpected windfall - decides they wish to retain that in cash - so opens a further cash ISA. How do they respond to the question you keep repeating? Obviously 'Yes' in your book .... despite they will not get past Go in that case. The valid answer (and the only one if you want to open the 2nd ISA) - is 'No'. As the first cash ISA is considered never to have existed. And it is the same with the self transfer - the closed ISA didn't exist. And the question is nothing to do with your stated reason. It is the old provider who advises if the transfer sum contains current year subscriptions - and the value - on a mandatory transfer history form.

Yet you appear to continually ignore the legitimate problem where someone is transferring via the mainstream route of the new provider. If they're given an application form .... they won't get past Go if they answer 'Yes'. So they're obliged to answer in the negative. Which leads to :

BAA1 wrote:

The particular declaration question needs to be amended to include this scenario for self transfer.

....... isn't going to happen. As otherwise it puts self transfer into the mainstream - which was never intended. It's there primarily to provide some alleviation for those who close an ISA in error. For most it's not a good mechanism in lieu of normal transfers - as it only facilitates replanting this years allowance. Which was the question I was originally addressing.
But it still leaves the problems (more threads than enough on this) of those transferring via normal means and who have to 'lie' on the application form. That can be resolved by the new provider using a transfer instruction instead of an application form ..... as the former does not need to carry any of the ISA declarations. But it is only of use where there are no unused current year allowances on the transfer - if the customer can still add money to the ISA following transfer, an application form must be obtained.

Anyone would think, from your reaction, this is the first time 'self transfer' has been raised. A quick search of this forum unearthes dozens of instances stretching back over the years. One of the more lucid postings was referenced in the FAQs that were written for 2010 :

https://forums.moneysavingexpert.com/discussion/2302457

and is referenced at post #11 :

http://forums.moneysavingexpert.com/showpost.php?p=30430447&postcount=11

Outside of HMRC - there was also a fairly considered article in Moneywise some 2 years ago :

http://www.moneywise.co.uk/news/2009-09-25/could-you-cash-isa-loophole ('second loophole')

Note in particular :

Patrick O'Brien, spokesman for HMRC, says: “A single self-transfer is allowed within the ISA rules so this is not a breach at all.”

I agree with him.

System

Yep, so the problem has existed since ISAs were created, they did a patch to the rules in 2003 but still the misunderstandings continue.

Hence, the rules and the wording of the declarations need to be re-worded so that everyone can understand clearly.

Any other argument, IMO is a cop-out.

We will probably have to agree to disagree on that final point, because I am NOT going to change my opinion.

Mikeyorks

BAA1 wrote: »

.... but still the misunderstandings continue..

Only by you. I've seen self transfer discussed a lot over the years and no one else appeared to have a major problem with it.

The Guidance is clumsy in parts because it's a patchwork quilt of amendments over the years. But it's 'Guidance for ISA Managers' - so you expect some sort of knowledge by its target audience?

We will probably have to agree to disagree on that final point, because I am NOT going to change my opinion

What a surprise. But I doubt Mr O'Brien will lose sleep over it.

System

Mikeyorks wrote: »

Only by you. I've seen self transfer discussed a lot over the years and no one else appeared to have a major problem with it.

Okay, that is why there are still new threads appearing on this same topic.

I think I will add you to my ignore list, because you argue for the sake of it :mad::p:A:(

nookam

So I should have done this earlier - but I've just spoken to my bank and I'm getting 0.2% on my cash isas from previous tax years (:(). I still have this year's allowance of upto £5,340 unused and am trying to look at my options - here's as far as I've got with it:

1. transfer the maximum possible (upto £5,340) from the existing isas into a new isa within the same provider and use up my annual cash isa allowance (i.e don't pay additional cash into a new isa).
The balance of cash remaining in the existing isa will continue to 'earn' 0.2%

2. transfer existing cash isas to a new provider which means I don't use up my annual allowance and can lump all the cash isa money in one product with a new provider at hopefully a better interest rate

Anyone else got any ideas of improving the rate of interest on the existing isa as well as creating a new one for this tax year without losing the tax benefits. thanks, N

System

nookam wrote: »

So I should have done this earlier - but I've just spoken to my bank and I'm getting 0.2% on my cash isas from previous tax years (:(). I still have this year's allowance of upto £5,340 unused and am trying to look at my options - here's as far as I've got with it:

1. transfer the maximum possible (upto £5,340) from the existing isas into a new isa within the same provider and use up my annual cash isa allowance (i.e don't pay additional cash into a new isa).
The balance of cash remaining in the existing isa will continue to 'earn' 0.2%

2. transfer existing cash isas to a new provider which means I don't use up my annual allowance and can lump all the cash isa money in one product with a new provider at hopefully a better interest rate

Anyone else got any ideas of improving the rate of interest on the existing isa as well as creating a new one for this tax year without losing the tax benefits. thanks, N

Simply find a suitable Cash ISA with any provider of your choice, deposit as much new cash as you wish up to this year's allowance of £5,340 and complete an ISA transfer form from the new provider to move all your funds from the old accounts to this new account so that all your money earns a better rate of interest.

Mikeyorks

nookam wrote: »

1. transfer the maximum possible (upto £5,340) from the existing isas into a new isa within the same provider and use up my annual cash isa allowance (i.e don't pay additional cash into a new isa).
The balance of cash remaining in the existing isa will continue to 'earn' 0.2%

Transfers - whether they be internal or external - don't use up your current year allowance. And - again internal or external - you're not limited to a 'maximum possible' under most circumstances.
So you can transfer all your previous year funds + add this years allowance either with your current provider or externally. Except some fixed rate products only allow a single deposit. In which case you make your current year subscription to the old ISA - then transfer.