Transfer an ISA if you're an ISA manager

Transferring an ISA

Investors have the right to transfer their Individual Savings Account (ISA) whenever they want. This right must be included in the manager’s ISA terms and conditions.

They do this by making a transfer application to the new manager. They cannot transfer an ISA by closing it and paying the proceeds into a new ISA with the new ISA manager. Where this occurs in respect of a lifetime ISA not only will the tax-free wrapper be removed, it will also be treated as a withdrawal and may be liable to a withdrawal charge.

Transfer rights in relation to non-cash innovative finance ISA investments are available only as set out in the terms and conditions of the account. There are no restrictions on funds held in cash, and stocks and shares ISAs being transferred to innovative finance ISAs.

A transfer application can be made by someone holding a mandate from the investor.

Allowable transfers:

• subscriptions can be transferred freely between cash, stock and shares, and innovative finance ISAs

• subscriptions to a lifetime ISA may be transferred to cash, stocks and shares and innovative finance ISAs but will be treated as a withdrawal and may be liable to a withdrawal charge

• subscriptions to a lifetime ISA may be transferred between lifetime ISAs without incurring a withdrawal charge

• funds held in cash ISAs, stocks and shares ISAs, and cash held in innovative finance ISAs may be transferred to lifetime ISAs, with the caveat that the amount transferred must not result in exceeding the annual lifetime ISA subscription limit

Transfer process

ISA managers are not obliged to accept transfers in.

The terms of a transfer should be agreed between the investor and both ISA managers.

Where an ISA is transferred all the tax benefits are preserved.

Subject to the ISA terms and conditions of both ISA managers, the old manager may transfer:

• the ISA investments, in which case the new manager must re-register the investments in accordance with their terms and conditions (refer to ‘ISA terms and conditions’ in our guidance on what you need from investors when they apply for an ISA)
• cash
• any combination of these

Investments and cash transferred are not new subscriptions for the purposes of the overall subscription limit. If transferred into a lifetime ISA, they may be eligible for a government bonus and may contribute towards the lifetime ISA threshold. For treatment of the transferred amount in respect of the government bonus refer to the guidance lifetime ISAs for ISA managers.

ISA managers must transfer investments and cash direct to new ISA managers. If transferred to the investor, this will be treated as a withdrawal and lose its tax-free wrapper and for a lifetime ISA, may also be liable to a withdrawal charge.

Find out more on how to manage ISA subscriptions for your investors.

ISA managers must keep a record of ISAs they transfer out, including the original or certified copy of the applications or in the case of applications not in writing, the declaration made by the manager for 3 years after the date of transfer. Find out more about what you need from investors when they apply for an ISA.

What amounts can be transferred

An Investor must either do one or both of the following:

• transfer all of the current year’s ISA subscriptions, the investments bought with those subscriptions, and any income arising on those investments
• transfer some or all of the previous years’ ISA subscriptions, the investments bought with those subscriptions, and any income arising on those investments

Where current year subscriptions are transferred, the total amount must be transferred (including any related income) and are treated for all ISA purposes as if they had been made to the receiving ISA manager.

Specific ISA types

Innovative finance ISA

A transfer of the cash is not possible unless all the current year subscriptions are transferred, therefore by liquidating the peer-to-peer loans and crowdfunding debentures or transferring ‘in specie’(this means to transfer ownership of an asset in its current form, without needing to convert the asset to cash).

Lifetime ISA

Transfers of current year’s subscriptions to another lifetime ISA means the government bonus must also be transferred. This also applies to previous year subscriptions.

Non-lifetime ISAs to lifetime ISAs

Only current year subscriptions (including any related income) which do not result in the lifetime ISA limit to be exceeded can be transferred.

Further information on reporting transfers is available in annual returns of information.

In cash and investment ISAs, if the investor has requested that the current year subscriptions be transferred, but the amounts cannot be identified, it may be regarded as cash and investments whose total value is anywhere between 2 limits.

The 2 limits are the total amount subscribed in the current year:

• plus a reasonable apportionment of any income arising on that subscription (upper limit)
• less withdrawals in the year (lower limit), if the withdrawals exceed subscriptions the lower limit is £nil

If the total value of the cash and other investments held in the ISA are less than the lower limit, then all the cash and investments count as current year.

Where an investor wants to transfer all or part of the previous year’s subscriptions, the manager should calculate the lower limit, and subtract that from the total value of the cash and investments in the ISA. Some or all the remainder can be transferred as a previous year’s subscriptions.

If the total value of the cash and other investments held in the ISA is less than the lower limit, all investments and cash held must be treated as a current year subscriptions and there are no previous years subscriptions to transfer.

Transfer applications

Unless the ISA is being transferred into an existing ISA with the new ISA manager, investors must make a transfer application to the new ISA manager when requesting a transfer.

This can be achieved by asking the investor to complete:

• a transfer authority form (which is not a requirement of the ISA regulations), which the new ISA manager forwards to the old ISA manager and authorises them to transfer the ISA (or part of it) to the new ISA manager
• an ISA application form or a transfer instruction

A transfer instruction should include the appropriate authorisation to hold the ISA investments and agreement to the manager’s ISA terms and conditions (refer to ‘ISA terms and conditions’ in our guidance on what you need from investors when they apply for an ISA). However, it is not required to include the investor’s date of birth, National Insurance number, or any of the ISA declarations. This can be completed by someone holding a mandate for the ISA investor. Find out more about how to open an ISA as an ISA manager.

The transfer is initiated by an approach to the new ISA manager.

If the new manager already holds an ISA for the investor into which the transfer will be made, a person holding a mandate to operate the account can request that the funds are moved into that account (as an application to open the account is not required). Subscriptions can be made following the transfer if the manager holds an application form that is still valid.

If the transfer requires a new account to be opened and the investor wishes to subscribe to the account, an application made by the investor or someone holding a mandate for the ISA investor will be needed.

If the investor is transferring ISA savings and does not wish to make any further subscriptions to the new account, the transfer can be processed by a person holding a mandate to operate the account. However, the new ISA manager cannot accept subscriptions without a new application.

The ISA application form or transfer instruction can be made by the application not in writing process. However, it is possible that the old ISA manager will require the transfer authority form to be signed by the investor before they will agree to release the funds. This is something for managers to resolve, the ISA regulations do not override the requirement for a signature if one is required by the old manager’s terms and conditions.

Find out more about what you need from investors when they apply for an ISA.

Internal Transfers

A transfer application is not required where an existing ISA investment is switched from one product to another (which is what happens on the maturity and ‘roll-over’ of a fixed-term product). The existing ISA continues (with either the same or a new account number). However, an ISA application form must be obtained where all the following apply:

• the investor is eligible to subscribe to the ISA after the transfer (the residence condition is satisfied)
• the investor intends to subscribe to the ISA after the transfer
• the existing application form is no longer valid

Where one type of ISA is transferred to another type, a transfer application is required. For example, where a stocks and shares ISA is transferred to a cash ISA, and the investor intends to subscribe following the transfer.

Find out more about what you need from investors when they apply for an ISA.

Cash ISA transfers

Cash ISA to cash ISA transfers must take place within 15 business days of the transfer instruction being received by the new ISA manager, unless the investor stipulates that the 15 days starts on a later date. The 15 days are broken down as follows:

The new ISA manager has 5 business days to forward the instruction to the old ISA manager.

The old ISA manager has 5 business days in which to send the funds and information to be provided to the new ISA manager.

The new ISA manager has 3 business days to apply the funds to the new ISA.

The other 2 days are to allow for time taken for first class post between managers.

This timetable does not apply to transfers for:

• cash ISA to stocks and shares, innovative finance or lifetime ISA
• stocks and shares, innovative finance or lifetime ISA to cash ISA

Managers should complete such transfers in accordance with their ISA terms and conditions (refer to ‘ISA terms and conditions’ in our guidance on what you need from investors when they apply for an ISA). If the previous ISA is a notice account or a fixed-term product, the investor may incur an exit penalty or interest penalty if the funds and transfer history form are sent to the new manager within the stipulated 5 business days.

To avoid the investor being penalised, the old manager could contact the investor and receive a revised instruction to transfer the ISA after the notice period has expired, or the product has reached maturity. This will be regarded as new transfer instruction that initiates a fresh timetable.

Information to be provided to the new ISA manager

The old ISA manager must give the new ISA manager a notice in writing containing information about the ISA being transferred using a transfer history form.

The information can be given electronically and need not have a ‘wet’ signature.

Where the transfer is a bulk transfer, the information must be provided at the time of the transfer. In cases where the investor initiates the transfer the information must be provided within 30 days after the transfer.

Where the old ISA manager does not send the transfer history form to the new ISA manager when transferring the ISA they should:

• notify the new ISA manager of the type of ISA (cash, stocks and shares, innovative finance, or lifetime ISA) and the amount transferred
• send the transfer history form to the new ISA manager within 30 calendar days of the date of transfer

Transfer history forms

Managers can download model ISA transfer history forms.

ISA manager can use their own transfer history forms. However, they must contain the same information as model forms.

Complete transfer history forms as follows:

Full name

ISA managers should enter the forenames or the first name and initial, and the surname of the investor.

Full permanent residential address

ISA managers should enter the full residential address of the investor.

You must provide the investor’s current permanent address, including postcode. You can use addresses for a:

• retirement home
• nursing home
• hospice or hospital
• British Forces Post Office

‘Care of’ or other correspondence addresses are not permitted. Where an investor’s permanent residential address is in doubt, ISA managers should stop accepting subscriptions until the correct current address has been obtained.

Postcode

ISA managers should enter the full postcode of the investor.

Date of birth

This should be reported in the format DDMMYYYY.

The date of birth of an investor born on 3 June 1932 should be reported as 03061932. If only the year of birth of the investor is known ISA managers should report 01011932. In respect of lifetime ISAs the investor’s full date of birth must be reported.

National Insurance number

This should be in the format QQ123456C. The final character, which will always be A, B, C or D, is not critical and ISA managers may omit it if not known.

If the investor does not have a National Insurance number, this entry should be left blank unless the ISA manager’s system requires the capture of a National Insurance number. In that case the ‘universal dummy National Insurance number’ QQ999999A should be used. ISA managers must not use any other dummy or substitute National Insurance number.

In respect of lifetime ISAs the investor’s full National Insurance number must be reported. It is not acceptable to not provide this information or to use the universal dummy National Insurance number.

Account number

ISA managers must enter the account number from their own records. In the case of a lifetime ISA being transferred this must be the same number that was previously used to report the account to HMRC.

Type of ISA

ISA managers must enter either:

• ‘A’ if current year subscriptions are being transferred
• ‘X’ if current year subscriptions are not being transferred

Where a flexible ISA is being transferred with net current year subscriptions of £nil and a valid date of first subscription, the ISA manager should enter ‘A’.

Date of transfer

This should normally be the date of which the new manager agrees to accept the transfer. It should be reported in the format DDMMYYYY.

Amount transferred

Enter the total amount of cash being transferred.

If any investments are being transferred in specie attach a list and tick the box.

Current year subscriptions

This box should be completed only where current tax year subscriptions are being transferred (‘A’ is entered in the type of ISA box).

Stocks and shares ISA must include any subscription made by the direct transfer of shares from a schedule 3 Save As You Earn (SAYE) option scheme, an approved profit-sharing scheme or a schedule 2 Share Incentive Plan (SIP) in the total box and also report it separately in the share scheme transfers box.

For non-flexible ISAs, enter the total amount subscribed to the ISA in the current tax year.

For flexible ISAs, the old manager must provide the new manager with the ‘net’ subscriptions in the current year. That is, the total subscriptions in the year less any amounts withdrawn. Where withdrawals equal or exceed the amounts subscribed a £nil figure should be provided.

Flexible and non-flexible ISAs will both be disregarding any:

• additional permitted subscriptions
• defaulted subscriptions including defaulted investment subscriptions
• Help to Buy ISA reinstatement subscriptions

Find out more on how to manage ISA subscriptions for your investors.

For lifetime ISA the following must also be included in the notice:

• the amount of government bonus that has been paid within the current year
• the amount of government bonus that has accrued but not yet been claimed or paid at the date of the transfer
• details of any qualifying additions for which a claim has not yet been made but with separate entries in respect of a Help to Buy ISA transfer
• any other qualifying additions

Share scheme transfers

This box should be completed only where:

• the ISA is a stocks and shares ISA or a lifetime ISA
• current tax year subscriptions are being transferred (‘A’ is entered in the type of ISA box)
• the current year subscription includes shares transferred from a schedule 3 SAYE option scheme or a schedule 2 SIP

Enter the market value of the shares at the date on which they were transferred into the ISA.

If the transfer is from a stocks and shares ISA to a cash ISA, the receiving cash ISA manager can ignore the entries made here as they do not need to include the details on their annual ISA return.

Date of first subscription in current year

This box should be completed only where current tax year subscriptions are being transferred (‘A’ is entered in the type of ISA box).

Enter the date on which the first subscription was made in the tax year of transfer. It should be reported in the format DDMMYYYY.

Where the net current year subscriptions are £nil, and managers are unable to override the Bacs (Bankers Automated Clearing System) default date of first subscription of 6 April, the transfer should proceed using the default date of 6 April.

For Flexible ISA, the date is that of the first subscription in the current year that counts towards the subscription limit, which does not include replacement of amounts previously withdrawn in the year. This will be disregarding any:

• additional permitted subscriptions
• defaulted subscriptions including defaulted investment subscriptions
• Help to Buy ISA reinstatement subscriptions

Find out more on how to manage ISA subscriptions for your investors.

Date of which the lifetime ISA was opened

Where the account transferred is a lifetime ISA the notice must also give the date on which that lifetime ISA was first opened. In respect of either:

• defaulted lifetime ISA subscriptions
• a returned withdrawal from a lifetime ISA following a failed first time residential purchase

The date on which the lifetime ISA was opened (if opened for the purpose of receiving such payment) is to be treated as being the same lifetime ISA from which the original payment originated.

Withdrawal for a first-time residential purchase

Where the account transferred is a lifetime ISA the notice must also confirm whether or not there has been a withdrawal for a first-time residential purchase.

It must also confirm whether any of the information required from the conveyancer declaration remains outstanding and if so it must also contain an undertaking to pass onto the new ISA manager without delay.

Find out more in our guidance on lifetime ISAs for ISA managers.

Date of Transfer

When any type of ISA is transferred, the 2 ISA managers must agree a common transfer date. Unless otherwise agreed, this will be the date included in the ‘transfer acceptance’ section of the ISA transfer authority form, or the date of the investor’s transfer instruction form.

The transfer date establishes:

• the date from which the new ISA manager can accept subscriptions
• which ISA manager is responsible for including details of the transferred ISA in its lifetime ISA claims and ISA annual returns

The new ISA manager may accept subscriptions from the date of transfer (provided they hold a valid ISA application form).

Where an ISA transfer straddles the end of a tax year the ISA is included in the:

• new manager’s annual returns if the transfer date is 5 April (or earlier)
• old manager’s annual returns if the transfer date is 6 April (or later)

Income received by the old manager after the date of transfer

Any income received by the old ISA manager after the date of transfer should be sent to the new ISA manager unless either:

• the old manager has been instructed to pay income received to the investor
• the income received is less than the minimum the new manager is prepared to accept

Where this includes a government bonus in respect of a lifetime ISA this must be forwarded directly to the new ISA manager. Any departure from this requirement may result in a withdrawal charge being due.

Information to be provided to the transferring manager by the new manager

Where the account being transferred is a lifetime ISA, the new manager must confirm to the old manager the type of ISA that the account is being transferred to. Where the new account is not a lifetime ISA, the transferred amounts will be treated as having been withdrawn from the lifetime ISA and may be subject to a withdrawal charge, which should be deducted by the transferring manager prior to transferring the funds.

Bulk transfers

A bulk transfer takes place where either:

• 2 managers agree to transfer 2 or more accounts between them without the agreement of the account investors, for example where an ISA manager has decided to rationalise or reorganise their ISA book by selling some or all of it to another manager
• the transfer takes place under an insurance business transfer scheme or a banking business transfer scheme under part 7 of the Financial Services and Markets Act 2000 (FSMA)

Before making a bulk transfer, the manager must notify HMRC and the investors whose accounts are being transferred. The notice must:

• specify the first day on which accounts will be transferred under the bulk transfer
• be provide at least 30 days before the bulk transfer
• provide the name and address of the manager who will receive the accounts

In addition, the notice to investors must:

• identify the account being transferred
• advise that the investor can arrange a transfer to a manager of their choice if they supply instructions by a certain date
• specify the date for receiving those instructions
• state that if the investor opts out of the bulk transfer but fails to provide further instructions in time, they will lose their ISA status (except for Junior ISA), in the case of a lifetime ISA, this will be treated as a withdrawal and may be liable to a withdrawal charge

Where the manager will cease to offer ISAs after the bulk transfer they must ensure the final returns are made so that HMRC records can be closed. Find out more on ceasing to be a manager.

When making a bulk transfer, the old manager need not complete separate transfer history forms for each ISA being transferred. Instead they may give the new manager a schedule that contains the information that would normally be entered on the transfer history forms.

Where managers adopt this approach, they must also send a covering notice to the new ISA manager. This notice should identify the ISAs being transferred by referring to the accompanying schedule.

If the transfer takes place to an existing account held with the new manager, the investor can make further subscriptions to the account if the application form held by the new manager for that account is still valid. Find out more in our guidance on what you need from investors when they apply for an ISA.

If the transfer is made to a new account, the new ISA manager can only accept subscriptions to that account if an application form has been given to the new manager and that application is valid.

Where subscriptions were being made to the old manager by direct debit, the new manager cannot collect payments under that direct debit until he holds a valid application form. They may accept the money on a provisional basis but if a completed application form is not received within 30 days the manager must void the subscription and remove the investments purchased with it from the ISA. Alternatively, the manager could place the money in a suspense account until a fully completed application is received.

Group Transfers

A ‘group transfer of accounts’ is a bulk transfer that takes place between members of a 75% group of companies, for example where one of the companies is a 75% subsidiary of the other or both are 75% subsidiaries of a third company.

Following a group transfer or a bulk transfer of accounts under Part 7 of FSMA, the new manager can accept subscriptions to the account if:

• the most recent application held by the old manager is available to the new manager
• that the application to subscribe to an ISA is still ‘valid’

The application is available to the new manager if it (or a copy) has been passed to the new manager or if the new manager could require it to be made available to them. The old manager will need to confirm to the new manager that there has not been a gap year where no subscriptions have been made.

An intra-group transfer can include cases where the manager has accepted an application (usually online) but is still awaiting the first subscription. If the application is available and still valid, the new manager does not need to obtain a fresh one.

Subscribing to the ISA after the transfer

If the investor intends to subscribe to the ISA after the transfer the new ISA manager must obtain an ISA application form unless they already hold a valid transfer application form.

In that case the application form would be valid for subscriptions made in:

• the year of transfer
• each successive year following the year of transfer, in which the applicant subscribes to the ISA

Other than for a lifetime ISA, it would cease to be valid at the end of a tax year in which the investor fails to make a subscription. Find out more in our guidance on what you need from investors when they apply for an ISA.

There are some circumstances in which an ISA manager may accept an application signed by someone other than the investor. Detailed information on this can be found in the section applying for an ISA on behalf of someone else in How to open an ISA as an ISA manager’.

Reporting Subscriptions made in the year of transfer

Where current year subscriptions are transferred the:

• old ISA manager must exclude the subscriptions from the annual return of information and enter ‘X’ in the type of ISA box
• new ISA manager must include the subscriptions in the annual return of information and enter ‘A’ or ‘B’ as appropriate in the type of ISA box

Reporting in respect of lifetime ISAs will not be required as part of the annual information return (ISAComm100) which is currently reported to HMRC within 60 days from the end of the tax year.

A report of information will be required, pertaining only to lifetime ISAs, in a digital format specified by HMRC and for lifetime ISAs only. Further information is available on digital reporting for lifetime ISAs.

Claims for payment of tax in respect of income paid after the transfer date

Claims for payment of tax in respect of income with a payment date on or after the date of transfer may not normally be made by the old manager.

However, provided that the old and new managers agree, the old manager may claim payment of tax in respect of income with a payment date on or after the date of transfer for a period of up to 6 months after the date of transfer.

The old manager should send the income received (and the tax claimed) to the investor if either:

• their instructions were to pay any income away to the investor
• the amount is less than the minimum the new manager is prepared to accept

Otherwise, the income (and tax reclaimed) should be forwarded to the new manager.

In the case of income received in respect of a lifetime ISA, any such income that is not paid into a lifetime ISA of the investor will be treated as having been withdrawn from the lifetime ISA, and may be subject to a withdrawal charge, which should be deducted by the old manager prior to paying that income to the investor. If the old manager has not made, and does not intend to make, a claim in respect of income received by them either:

• up to and including the date of transfer
• from the date of transfer

The new manager can make the claim. The old manager should forward the relevant tax vouchers, to the new manager to enable them to do so.

Cancellation of a transfer

Under the Financial Conduct Authority (FCA) rules, stipulated in the FCA’s sourcebook (conduct of business sourcebook), the transfer or an ISA to a new ISA contract may require the ISA manager to offer the investor the option of either cancellation rights or pre-contractual withdrawal rights (often referred to as cooling off). The time periods offered will be dictated by various factors including:

• the type of ISA being transferred into
• whether the contract is a distance or non-distance (retail) contract
• whether the ISA manager has chosen to offer withdrawal rights rather than cancellation rights
• whether the ISA includes an insurance policy
• whether the manager choses to voluntarily offer a longer cancellation period than that stipulated in the FCA sourcebook (there are further details on the treatment of tax liability provided the cancellation period does not exceed 30 days

Cancellation periods offered are typically between 14 and 30 days and withdrawal periods will be either 7 or 14 days.

If the new ISA manager offers a 7 or 14 day withdrawal period, the transfer request should not be forwarded to the old ISA manager until the withdrawal period has expired. The investor has 7 or 14 days to reconsider their decision (the withdrawal period). If, during the withdrawal period, the investor informs the new manager that they no longer wish to proceed with the transfer, the new manager should not progress the transfer any further. The transfer request will not be forwarded to the old manager, so the old manager may not know that a transfer was ever intended. The funds will stay in the original ISA.

If the new manager chooses not to offer a withdrawal period, there is a 14 to 30 day cancellation right. In this case the ISA would be transferred to the new manager before the 14 to 30 day cancellation period began. If the investor decides to cancel, it is the purchase of the investment in the new ISA that is cancelled, not the transfer itself. The investor has an ISA with the new ISA manager. The investor can choose to either:

• invest the money in a different investment offered by the new ISA manager (in respect of lifetime ISAs that the account remained within a lifetime ISA wrapper)
• close the ISA (in respect of lifetime ISAs this will be treated as a withdrawal from a lifetime ISA and will be subject to a withdrawal charge which must be deducted prior to closure)
• transfer the ISA back to the old ISA manager (in respect of lifetime ISAs it must remain within a lifetime ISA wrapper or be subject to a withdrawal charge which must be deducted prior to transfer)
• transfer the ISA to another ISA manager (in respect of lifetime ISAs it must remain within a lifetime ISA wrapper or be subject to a withdrawal charge which must be deducted prior to transfer)

Further information is available on closure of a lifetime ISA in lifetime ISAs for ISA managers.

Transfers in that cannot be accepted by the new ISA manager

On occasion, the new ISA manager may be unable to accept an incoming transfer. This is usually because:

• the new manager realises that the amount of current year subscriptions being transferred exceed the annual subscription limit (or lifetime ISA payment limit) when aggregated with the amount already subscribed with them in the current year
• it arrives after the date by which all transfer proceeds must be received for a structured product (or similar) on sale only for a limited time
• the new manager realises that the terms and conditions of the ISA product in question do not allow transfers in

In these circumstances, if the amount of current year subscriptions being transferred, when aggregated with the amount already subscribed to the new manager in the current year, exceed the annual subscription limit the new manager has a choice, they may:

• remove the excess current year subscriptions and pay them to the investor and pay the balance into the ISA — managers can ignore any growth on the amount removed and simply remove the excess subscription amount, however, this does not apply in respect of lifetime ISAs — if the investor claims that the value of the excess subscription is less than the amount originally subscribed, the new manager will need to contact the old manager to determine the value — if this is less than the amount subscribed only the value needs to be removed

• return the current year subscriptions to the old manager, together with a note explaining why they are unable to accept them

In all other circumstances, the new manager should return the cheque to the old manager, together with a note explaining why they are unable to accept it. Returning funds to the old manager could leave the transfer in ‘limbo’ as the old manager has followed the instructions to transfer out and a transfer out has happened under the ISA regulations (notwithstanding the new manager has not processed the transfer in).

Where the old manager is willing and able to do so, they should reinstate the ISA to put the investor back into the position they would have been in had the transfer out never happened. In this scenario lifetime ISAs must be re-instated by the old manager.

If the old ISA cannot be reinstated (for example, where the old product is a fixed-rate product that cannot be re-opened once it has been closed) the old manager may offer the investor the opportunity to place the returned or rejected transfer proceeds into another of their ISA products.

The old manager would need to treat this as an internal transfer between ISA products otherwise the sum would have to be regarded as an ISA subscription and subject to the annual subscription limits. In these circumstances where the old ISA is a lifetime ISA and the rejected or returned proceeds are not placed in a lifetime ISA, this will be treated as a withdrawal from a lifetime ISA, and may be subject to a withdrawal charge, which should be deducted by the ISA manager.

The old manager is under no obligation to reinstate the ISA, except for a lifetime ISA. If the old manager is not prepared to reinstate the ISA, they should allow the investor to transfer the ISA to another provider, so the ISA status of the savings is not lost.

Cash withdrawn in error as a result of incorrect transfer advice by an ISA manager

Where cash is withdrawn from an ISA in error as a result of incorrect advice from either the old ISA manager or the new ISA manager in relation to a transfer application, HMRC may allow reinstatement where there is clear evidence of the investor’s intention to transfer the ISA and the incorrect advice given by the ISA manager.

Flexible ISA transfers

Where a Flexible ISA is transferred, the old manager must provide the new manager with:

• the ‘net’ subscriptions in the current year, which is the total subscriptions in the year less any amounts withdrawn (disregarding any additional permitted subscriptions,defaulted subscriptions and Help to Buy ISA reinstatement subscriptions, where withdrawals equal or exceed the amounts subscribed a £nil figure should be provided
• the date is that of the first subscription in the current year that counts towards the subscription limit, which is the date of the first subscription that is not a replacement of amounts previously withdrawn in the year, additional permitted subscriptions and defaulted subscriptions should be ignored for this purpose

Where the net current year subscriptions are £nil, and managers are unable to override the Bacs default date of first subscription of 6 April, the transfer should proceed using the default date of 6 April.