Help with transfering/closing cash ISA

abby82

I currently have a cash ISA with Halifax. I'm pretty skint at the moment so there's only actually £200 in it.

I'm about to come in to some money in September and want to put it in my ISA but think I should probably try and find a better deal. Is it possible to close my current ISA to get my £200 which I could do with at the mo and then can I open a new ISA in september or should I be looking to transfer my £200 now and where is the best cash ISA at the moment?

Many thanks in anticipation of lots of help

Abby

isofa

When did you put the £200 into the ISA, this tax year (from 6th April 2008), or before?

abby82

before. I got it abour 3 years ago and have gradually taken money out when I needed it. There seems no point in having it. Id rather have to £200 and start a new one but I don't know if I can do that

isofa

Yes you can definitely start a new one. You have a £3600 cash ISA allowance this year (providing you having added anything to the other ISA mentioned). To can subscribe to a new cash ISA each tax year, at the moment the yearly allowance is £3600.

In addition you can transfer cash ISAs from one provider to another, to get betters rates etc. providing you aren't adding anything to the balance, you aren't "subscribing" to a new cash ISA (i..e. adding more than £3600 new funds a year), so there is no restriction on this.

If you close and take the money out, it'll lose it's tax status, so you won't be able to add the £200 to the £3600 allowance of this year in another ISA (i.e. making £3800) . However if you are never going to be able to save £3600 by 5th April 2009, it's largely irrelevant and you might as well close it, withdraw the money and open another good one.

Essentially if you close a cash ISA and withdraw the money, it loses it's tax free status, but if you transfer to another ISA provider, it retains it.

However if you can manage to put away £3600 by 5/4/09, then it might be worth transferring. Not all providers accept transfers in, there is a good list here at Moneyfacts.

If you just want to open another, without transferring the £200 from your existing one, the best cash ISAs are listed here.

abby82

Well I am cominn in to some money in September which I want to put in an ISA so is it best for me to transfer? Also is there a minimum amount I can transfer i.e is it ok to transfer my measley little £200

Thanks for all your help:j

isofa

Most providers state you must transfer the entire amount of the cash ISA. So you'd have to transfer (don't close it yourself if you want the £200 to retain the tax free status), plus then add your new money (up to £3600) when you can.

However some also have a minimum transfer balance, such as Ruffler Bank, so you won't be able to transfer there.

You have to decide whether it's worth the hassle to transfer the £200 out to a new ISA first, (200 at 6% gross generates £12 interest per year for example), or whether just to close and open a new one from scratch. Transfers usually take 30 days.

You could also just leave the £200 in the Halifax ISA and open a new one somewhere else too...

abby82

Right I think I've decided. I'm just gonna close the ISA and get my £200 and then open up a new ISA in September when I ge tmy money.

Thanks again for your help.

Abby