Plenty of stocks-and-shares ISA providers appear to offer 'in-specie' transfers in, where securities already held in an ISA with another provider can be moved over, without the need to sell, transfer cash, and then rebuy.

However, as far as I'm aware, ISA legislation makes a strong distinction between the current year's ISA contributions, and previous years. In particular, one may only contribute to a single stocks and shares ISA in a tax year, unless one does a transfer of the current year's contributions to another provider.

When one makes a transfer of only the current year, presumably there are some irresolvable edge cases, if one uses 'in specie' transfers.

For example, if an individual security is purchased using a mixture of money from a previous tax year and contribution from this tax year, is that security to be moved in a current-year-only, in-specie transfer or not?

I presume that when we transfer cash between ISAs, as part of a current-year contribution transfer, what gets moved is purely the contribution -- any interest, growth or dividends earned on the contribution capital stay behind with the non-current-year assets. Otherwise, there would need to be a high level of tracking of returns, allocating them to specific contributions -- and any losses on invested contributions would have the effect of reducing the amount which could be transferred, while still using up current-year contribution limits.

I can't make sense of the possibility of in-specie, contribution-limited, current-year transfers between ISAs -- how can they possibly be accounted for?

What if I want to do an in-specie transfer for the current year of securities which were exclusively bought in a previous year? I presume this is possible, with only the contribution limits being respected -- there's no obvious allocation of assets to contribution years.

Have I missed something? Are in-specie transfers only permitted for previous years? (Even then, we still have the problem of a large-denomination security which has been purchased using money from both this year's contribution and last year's contribution -- transferring that security as a previous-year in-specie move might breach the rules).

The current-year/previous-years split makes some sense in the context of currency transfers (cash); the currency/in-specie split makes sense in the context of disregarding annual contribution limits.

However, combining the two facilities seems to lead to irreconcilable problems with rule-compliance.

What am I not understanding?