ISA Question

lisa10m · 18 January 2011 at 2:00PM

My ISA account, opened a few years ago, has a low interest rate of 0.25, I therefore wish to close the account and open a new one with a better rate. I have been paying into my current ISA this financial year but have not used the annual allowance - Is it possible to pay into 2 ISA accounts within the same financial year?

Or is it just that you cannot open more than one ISA within same financial year?

Thanks, Lisa

dazeruk · 18 January 2011 at 2:18PM

lisa10m wrote: »

My ISA account, opened a few years ago, has a low interest rate of 0.25, I therefore wish to close the account and open a new one with a better rate. I have been paying into my current ISA this financial year but have not used the annual allowance - Is it possible to pay into 2 ISA accounts within the same financial year?

Or is it just that you cannot open more than one ISA within same financial year?

Thanks, Lisa

You can open but not contribute to more than one ISA within a financial tax year.

You shouldn't close your original ISA if you want to keep the money within the tax wrapper. Open a new, better rate ISA and then transfer the money, initiated by the new ISA provider not by withdrawing the money yourself, to it. Transfers of this kind don't count as new money invested.

You have the choice of keeping the money invested this year in it's current ISA or moving it along with the previously invested money.

Loughton_Monkey · 18 January 2011 at 2:46PM

Never close an ISA account unless you need to spend the money. What you do is to transfer it. The transfer is usually (and best) done by the 'accepting' ISA. If the ISA to which you contributed this tax year (a) pays good interest, and (b) accepts transfers in, then simply ask them to transfer it.

If one of these doesn't apply, then you will need to find another ISA supplier who (a) accepts transfers in, and (b) are willing to open an ISA to which you will not be transferring this tax year.

Watch for the 'angle' that I think Halifax uses. You can open a new ISA and ask them to transfer in another one, but I think they must have £1 as a 'nominal' contribution for the current tax year. This is technically illegal if you have contribute elsewhere.

Consumerist · 18 January 2011 at 10:29PM

Hi Lisa and welcome to the MSE forum.

lisa10m wrote: »

My ISA account, opened a few years ago, has a low interest rate of 0.25, I therefore wish to close the account and open a new one with a better rate.

As mentioned earlier, DO NOT CLOSE this ISA or you will lose the tax-free status on the balance. To get a better rate, you should TRANSFER it to a new ISA manager who accepts transfers-in (of previous years' ISAs). Find the ISA you want then complete the new ISA manager's transfer form and return it. The new ISA manager will deal with the transfer which should take no longer than three weeks

lisa10m wrote: »

I have been paying into my current ISA this financial year but have not used the annual allowance - Is it possible to pay into 2 ISA accounts within the same financial year?

As also mentioned earlier, you can only pay in to one ISA in any one tax year. Since you have already contributed to an ISA in the current tax year you cannot pay in to another one. If you are happy with the interest you are getting then just carry on as you are. If you want to get a better rate elswhere then this ISA should also be transferred in similar fashion to previous years' ISAs.

slinga · 19 January 2011 at 5:05AM

Just to clarify.
If I transfer say one UT ISA to another UT ISA I can transfer more than the initial ISA allowance?????????
In the same tax year I can also buy into a new UT ISA up to the yearly ISA limit??????????

DavidHayton · 19 January 2011 at 5:40AM

Nit sure what you mean by UT, but for any ISA...

slinga wrote: »

Just to clarify.
If I transfer say one UT ISA to another UT ISA I can transfer more than the initial ISA allowance?????????

Yes.

slinga wrote: »

In the same tax year I can also buy into a new UT ISA up to the yearly ISA limit??????????

Yes.

Loughton_Monkey · 19 January 2011 at 9:09AM

For each type of ISA [i.e. Cash ISA and Stocks & Shares ISA]:

1. All money in all ISA's is totally and freely transferrable from one ISA provider to the other. You could move £50K 16 times to 16 different companies in each tax year. It doesn't matter. Transfers are transfers. Get on with them. Nothing wrong with them.

2. Regardless of amount, you can only subscribe to ONE ISA (of each type) in any Tax Year. So the minute you put £1 into your Cash ISA, then all you can do for the rest of the year is put up to £5,099 more in the same ISA.

3. For the SINGLE ISA to which you chose to contribute in a Tax Year, it must be within the limit. Which is currently £5,100 for a Cash ISA. You can also contribute up to £5,100 to a Stocks & Shares ISA - or up to £10,200 if you don't put a single penny into a Cash ISA.

4. You can transfer cash in a Cash ISA to a Stocks & Shares ISA. But you cannot transfer the other way round.

psychic_teabag · 19 January 2011 at 10:33AM

To clarify point 2 : if I open a new instant-access cash ISA with provider A, pay in £1000, then that same financial year, transfer it to provider B, is it still "the same ISA" - i.e. can I continue to pay in the same year ? (Assuming new T&C allow it, ie it's still instant-access, etc.)

For a bonus point : can I contribute to provider B after filling in the transfer form, but before the transfer has actually completed ?

Mikeyorks · 19 January 2011 at 11:59AM

psychic_teabag wrote: »

1) To clarify point 2 : if I open a new instant-access cash ISA with provider A, pay in £1000, then that same financial year, transfer it to provider B, is it still "the same ISA"
2) For a bonus point : can I contribute to provider B after filling in the transfer form, but before the transfer has actually completed ?

1) Yes. It's an important point that it is 'the same ISA' .... just with a different provider (and their T&Cs). If more people recognised that ... there'd be less confusion?

2) No. Otherwise - albeit temporarily - you're contributing to 2 x ISAs in the same year. So if they ask you for a £1 to open it - decline. If it's imperative to add money in a hurry .... do it to provider A prior the transfer.

Consumerist · 19 January 2011 at 12:03PM

psychic_teabag wrote: »

To clarify point 2 : if I open a new instant-access cash ISA with provider A, pay in £1000, then that same financial year, transfer it to provider B, is it still "the same ISA" - i.e. can I continue to pay in the same year ? (Assuming new T&C allow it, ie it's still instant-access, etc.)

Yes

For a bonus point : can I contribute to provider B after filling in the transfer form, but before the transfer has actually completed ?

Maybe. An ISA is "opened" once it has been funded BUT the old ISA must have been closed before you can add to the new ISA. If the first ISA is still "open" you can't, technically, contribute to the second.

Edit
Oops ! - I seem to have butted in. Apologies Mikey.

ISA Question

Comments

Confirm your email address to Create Threads and Reply

🚀 Getting Started

Categories

Is this how you want to be seen?

Get our FREE Weekly email full of deals & guides - and it’s spam-free