Non-motoring > ISA question Miscellaneous
Thread Author: L'escargot Replies: 28
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 Thu 12 Apr 12 09:20 
 ISA question - L'escargot
I have two ISAs, one with one bank and one with another. I haven't carried out a transaction with either ISAs in the current financial year.
Can I withdraw money from one ISA, and then make a deposit in the other ISA? It would not be a direct transfer from one ISA to the other. The transactions would be carried out via current accounts in both banks.
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 Thu 12 Apr 12 09:46 
 ISA question - John H
Assuming you are talking about cash ISA, then here it is straight from the Expert's mouth:

"Never, ever, ever, ever withdraw money from a cash ISA!
You'll immediately lose all the tax benefits."

www.moneysavingexpert.com/savings/ISA-guide-savings-without-tax

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 Thu 12 Apr 12 10:42 
 ISA question - Ambo
So this does not apply to stocks and shares ISAs? I thought that the S&S has to be sold as the provider will not transfer lock, stock and barrel and the new provider will re-invest the money. However, the cash transfer will remain under ISA protection all through. There would of course be selling expenses and then buying expenses, which ought to make one think twice.

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 Thu 12 Apr 12 10:44 
 ISA question - neiltoo
If you withdraw money from an ISA, you lose that much from that years allowance, and you cannot replace it. The only way to move it is by asking the new provider to transfer the money from the old provider, when it retains the protection.

Neil
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 Thu 12 Apr 12 10:52 
 ISA question - PeterS
>> "Never, ever, ever, ever withdraw money from a cash ISA!
>> You'll immediately lose all the tax benefits."

Whilst that's true in terms of the loss of tax sheltering, if you never, ever, ever, ever withdraw it you might as well not have put it in there in the first place ;-)
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 Thu 12 Apr 12 11:14 
 ISA question - Dutchie
That is true Peter.>:) We have put two cash ISA's in with Satander 4% interest tax free over two years.
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 Thu 12 Apr 12 11:17 
 ISA question - John H
>> Whilst that's true in terms of the loss of tax sheltering, if you never, ever,
>> ever, ever withdraw it you might as well not have put it in there in
>> the first place ;-)
>>

A dumb comment, if ever there was one. It proves you haven't read the context in which the reply was given:

1. The OP's question "Can I withdraw money from one ISA, and then make a deposit in the other ISA?"

2. or the link I gave, from where the quoted reply was taken. The Expert says:

"... my golden ISA transfers rule .... "

:)
(even though I don't think you deserve one).

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 Thu 12 Apr 12 11:23 
 ISA question - PeterS
Or perhaps you missed the ;-) in my reply... Never, ever, ever, ever is awfully final IMHO :-)
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 Thu 12 Apr 12 11:48 
 ISA question - John H
>> Never, ever, ever, ever is awfully final IMHO >>

which obviously means

1. you did not see or understand the qualifying statement that preceded it,

and/or

2. you do not appreciate that that commercially successful web site is meant for getting the message across to dumbos who are not chartered accountants.

:P

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 Fri 13 Apr 12 15:17 
 ISA question - PeterS
>> which obviously means
>>
>> 1. you did not see or understand the qualifying statement that preceded it,
>>
>> and/or
>>
>> 2. you do not appreciate that that commercially successful web site is meant for getting
>> the message across to dumbos who are not chartered accountants.
>>
>> :P
>>


Or alternatively,

3. Adding some further context and a bit of humour ...

;-)
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      1  
 Thu 12 Apr 12 12:25 
 ISA question - RichardW
The answer has got lost in the posts below....

Yes, you can do what you propose, but the money will come off your annual ISA allowance (£11,280, of which only 50% £5.640 can be invested in Cash ISA) so you limit the further amount you can pay in / if the amount is more than the ISA limit you won't be able to pay it in.

Worth asking if the preferred supplier will transfer the funds from the other bank, as then it does not come off your ISA allowance, and there is no problem with the ceiling.

If they won't play ball, then open a third ISA and get them to transfer both lots in.
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 Thu 12 Apr 12 12:32 
 ISA question - Clk Sec
I've got various ISA accounts myself, but I sometimes wonder whether the cash versions are worth bothering about.

They probably are, but only just.
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 Thu 12 Apr 12 12:52 
 ISA question - Meldrew
Well they don't beat inflation but it is better than 0 to 0.5% in a current account. Some matured and then forgotten Cash ISAs revert to 0.1%
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 Thu 12 Apr 12 13:10 
 ISA question - Clk Sec
Forgotten, indeed. A nice little money spinner, but at least 'some' of our financial institutions have the courtesy to let people know when their interest rates are about to nosedive.
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 Thu 12 Apr 12 21:34 
 ISA question - Rudedog
I related ISA question I hope.. can I hold more than one S&S ISA? I've been lead to believe that I can't, but I wasn't sure if that was per tax year.
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 Fri 13 Apr 12 06:55 
 ISA question - L'escargot
Thanks, John H, for the link to Martin Lewis' article. Nevertheless and not withstanding what he says about never ever ever ever withdrawing cash from an ISA I'm still considering my plan.

Let me rephrase the question(s) and be more specific about what I'd like to do.

(a) Do the ISA tax rules allow me to withdraw £5640 (my allowance for this year) from the first ISA with one bank and deposit it in an existing second ISA with another bank? (Thanks, RichardW, for answering that part.)

(b) Bearing in mind that we're only a few days into another financial year, is there any significant financial disadvantage to withdrawing the said amount from the first ISA which now pays only a paltry 0.5% and depositing it in the second ISA which currently pays 3.0%? As I said in my original post, the process would be via two separate transactions and not a transfer.
Last edited by: L'escargot on Fri 13 Apr 12 at 06:58
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 Fri 13 Apr 12 07:20 
 ISA question - Ambo
Why not ask the banks concerned?
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 Fri 13 Apr 12 07:45 
 ISA question - John H
>> Let me rephrase the question(s) and be more specific about what I'd like to do. >>

I am not sure what you wish to do, but here is a simple way of looking at ISAs.

Instead of using the term ISA, let us call it a Box. That Box can be deposited with any "bank" of your choosing that provides the service.

Each year you are/were allowed to put in cash in a Box, say Box2005, or Box2010, or Box2012 for this current new tax year. The maximum capacity of the boxes for previous years is fixed at the amount that you had deposited in those boxes. You cannot add to what is in the past Boxes, but you can draw down from them.

If you want to move, say, Box2005 from BankA to BankB, you have to fill in a transfer request.

However, if you open Box2005 to draw a little or all of the cash in it, the amount you have removed from the Box loses the "tax-free" protection of the Box forever.

Now that cash is outside Box2005, and is no different to any other cash, i.e. it is cash in your "wallet" which is not in any Box, and you can do whatever you wish with it.

So, if you have not used up your allowance for Box2012, you can place the released money in to Box2012 and use up all or part of the capacity of your Box2012.

If BankB is offering 3% for transfer of a Box2005, then I would simply transfer the Box2005 to BankB, and keep the unused capacity of my Box2012 for use later on in the financial year should the opportunity arise.

Does all that make sense?

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 Fri 13 Apr 12 09:24 
 ISA question - L'escargot
>> Does all that make sense?

Yes, thank you. I think I've finally got it.
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 Fri 13 Apr 12 07:51 
 ISA question - Meldrew
I have just transferred the proceeds of a maturing ISA into a new one. As a result I can now put this year's allowance into it and have £10K plus in the account. If I had withdrawn it I could only have put the sum into a new ISA, could not have added to it and would have "lost" the ISA status of the last year's money ie it has to be an internal transfer between 2 financial providers without the funds EVER coming under your control or into your current account, for example.

Anyone who has a Nationwide Flexaccount can get 4.25% instant access cash ISA. This a very good rate - Santander are giving 4% but that is for 2 years with no access.

Not quite the situation to which John H is referring.
Last edited by: Meldrew on Fri 13 Apr 12 at 07:53
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 Fri 13 Apr 12 10:07 
 ISA question - Dutchie
With Satander I can take the money out Meldrew but if I did lose the benefit.Have to give the bank notice.Our regular bank is the Coop.We transferd some moneys to Brittania bank which is now part of the Coop.Whatever we do we don't gain much just try to keep level with inflation.Shares are best if you prepared to take a risk.
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 Fri 13 Apr 12 10:52 
 ISA question - Meldrew
Dutchie this is information NOT advice! I had a successful dabble in ZOPA. Just google for it and all will be explained!
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 Fri 13 Apr 12 11:17 
 ISA question - Crankcase
Interesting, Meldrew. I was poking about at Zopa last week, to see if it was interesting, but something put me off. Unfortunately I can't now remember what it was...


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 Fri 13 Apr 12 14:21 
 ISA question - Ambo
"Unfortunately I can't now remember what it was..."

The unfavourable ZOPA risk/5.6% return ratio maybe? I get 6% on an S&S ISA net of charges in a small, relatively safe mix of invesment and unit trusts. Of course, one must always keep the wealth warning in mind, "The value of your investments may go down as well as down", especially in the hands of a stockbroker, one, according to Wood Allen, "who invests your money for you until it is all gone".

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 Fri 13 Apr 12 14:49 
 ISA question - Crankcase
Now that you say it, the words game and candle do come to mind, yes.

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 Fri 13 Apr 12 15:50 
 ISA question - Meldrew
I had money with Zopa. Bearing in mind that borrowers pay £95(?) for their credit check there aren't going to be too many fly-by-nights, I think. I put £1000 in, which was split into 50 blocks of £20, thus spreading the risk and got a rate of return which equated to 12% before tax. I am going to give it another try when I see what I have around after funding a new cash ISA!
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 Fri 13 Apr 12 16:57 
 ISA question - Ambo
12% before tax This is a lot more than the webpage suggests so obviously worth a closer look.
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 Fri 13 Apr 12 23:14 
 ISA question - mikeyb
I tried a couple of grand in Zopa - got good rates to star with, but then the late / non payers eroded it.

Also not to easy to get all your money back if you want it out.

Not worth the hassle IMO
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 Fri 13 Apr 12 23:51 
 ISA question - Dutchie
Ok Meldrew thanks.
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