Has anyone managed to transfer an ISA?
Feb 23rd 2012, 6:56 pm
#1
Forum Regular
Thread Starter
Joined: Jun 2011
Location: BC
Posts: 96
Has anyone managed to transfer an ISA?
Hi folks,
I understand that you cannot contribute to existing ISAs whilst not resident in the UK, but has anyone successfully managed to transfer an existing ISA from one UK provider to another UK provider?
When transferring to a new provider the forms asked you to declare that you are "tax resident in the UK". However, HMRC allows you to still keep ISAs open before leaving the UK (even though you get taxed on it by CRA if resident in Canada).
The need for transfer is forced by these daft "bonus" rates which in essense mean after 12 months your Cash ISA can drop from e.g. 3% interest to 0.05% interest. Definately worth checking your ISA rates if it is over a year old with your existing provider.
Also, has anyone found any decent (non-fixed term) savings rates in Canada? It appears that even after being taxed, you still earn more interest from UK savings.
I understand that you cannot contribute to existing ISAs whilst not resident in the UK, but has anyone successfully managed to transfer an existing ISA from one UK provider to another UK provider?
When transferring to a new provider the forms asked you to declare that you are "tax resident in the UK". However, HMRC allows you to still keep ISAs open before leaving the UK (even though you get taxed on it by CRA if resident in Canada).
The need for transfer is forced by these daft "bonus" rates which in essense mean after 12 months your Cash ISA can drop from e.g. 3% interest to 0.05% interest. Definately worth checking your ISA rates if it is over a year old with your existing provider.
Also, has anyone found any decent (non-fixed term) savings rates in Canada? It appears that even after being taxed, you still earn more interest from UK savings.
Apr 30th 2012, 4:45 pm
#2
Just Joined
Joined: Apr 2008
Posts: 7
Re: Has anyone managed to transfer an ISA?
I made enquiries to many stock brokers (non-cash ISA) and found that only Barclays Stock Brokers would allow me to open an ISA account and accept an incoming ISA transfer with me being no longer resident in the UK. All other stock brokers that I contacted will only open a new ISA account if you are resident in the UK (even if it is just to transfer an ISA into it).
Apr 30th 2012, 5:17 pm
#3
Grumpy Know-it-all
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: Has anyone managed to transfer an ISA?
As soon as you cease to be resident in the UK, you cannot use an ISA nor is it recognized in Canada as being exempt from tax as the treaty doesn't mention them because they're only available to UK residents.
Essentially it is a regular investment subject to capital gains and income taxes in Canada so there is no point bothering to attempt to transfer from one ISA account to another in the UK. You tell them you are non-resident, they remove the ISA restrictions, you pay Canadian taxes on it.
The Canadian equivalent is the TFSA.
You should also file an R105 with any UK financial institutions that withhold income tax for HMRC, you then pay Canadian income tax on that income by declaring it on your T1 every year.
I realize you're trying to get a favourable rate rather than trying to avoid tax, but ISAs are only legally available to tax residents of the UK, according to UK law.
Essentially it is a regular investment subject to capital gains and income taxes in Canada so there is no point bothering to attempt to transfer from one ISA account to another in the UK. You tell them you are non-resident, they remove the ISA restrictions, you pay Canadian taxes on it.
The Canadian equivalent is the TFSA.
You should also file an R105 with any UK financial institutions that withhold income tax for HMRC, you then pay Canadian income tax on that income by declaring it on your T1 every year.
I realize you're trying to get a favourable rate rather than trying to avoid tax, but ISAs are only legally available to tax residents of the UK, according to UK law.
Apr 30th 2012, 5:50 pm
#4
Just Joined
Joined: Apr 2008
Posts: 7
Re: Has anyone managed to transfer an ISA?
As soon as you cease to be resident in the UK, you cannot use an ISA nor is it recognized in Canada as being exempt from tax as the treaty doesn't mention them because they're only available to UK residents.
Essentially it is a regular investment subject to capital gains and income taxes in Canada so there is no point bothering to attempt to transfer from one ISA account to another in the UK. You tell them you are non-resident, they remove the ISA restrictions, you pay Canadian taxes on it.
The Canadian equivalent is the TFSA.
You should also file an R105 with any UK financial institutions that withhold income tax for HMRC, you then pay Canadian income tax on that income by declaring it on your T1 every year.
I realize you're trying to get a favourable rate rather than trying to avoid tax, but ISAs are only legally available to tax residents of the UK, according to UK law.
Essentially it is a regular investment subject to capital gains and income taxes in Canada so there is no point bothering to attempt to transfer from one ISA account to another in the UK. You tell them you are non-resident, they remove the ISA restrictions, you pay Canadian taxes on it.
The Canadian equivalent is the TFSA.
You should also file an R105 with any UK financial institutions that withhold income tax for HMRC, you then pay Canadian income tax on that income by declaring it on your T1 every year.
I realize you're trying to get a favourable rate rather than trying to avoid tax, but ISAs are only legally available to tax residents of the UK, according to UK law.
It is perfectly legal to continue to hold an ISA in the UK when one is non-resident. HMRC does NOT allow a non-resident to contribute to an ISA but they DO allow you to continue to hold an ISA and also allow ISA transfers (although I found few providers will actually do this).
There are several reasons one may choose to continue to hold a UK ISA (e.g. if one intends to return to the UK at some point in the future and want the investments to be tax free upon ones return) and also to transfer an ISA while non-resident (e.g. to switch from an ISA invested in high fee mutual funds to a provider that gives access to low cost ETFs).
