Question about fixed-rate ISAs

mr_sharma

But is the allowance cumlative. E.g.

first year £3,600 with Egg,

close account transfer to ING Direct, top up with another £3,600 (to make £7,200)

close account transfer to Halifax, top up with another £3,600 (to make £10,800)

From my (new!) understanding you can have £3,600 each and every year scattered across various accounts. I don't know why but I like the idea of consolidation!

Baldur

The_Pedant wrote: »

Am I able to transfer an under performing ISA at 'any time', as well as opening a new ISA.

e.g. Open the new ISA in april with a good rate, but due to restrictions, does not allow transfers, and pay in part/all of that year's allowance. Then, at a later point in the year, transfer an old underperforming ISA to a newer, more appealing ISA?

I was just wondering as I'm just a little fuzzy about the 'you can only invest in one ISA in the financial year' line (off my head from the ISA rules), along with the previous responses here, so I'm wondering whether I can transfer at any time, and providing I don't put additional money in, and providing the terms allow me, I can transfer whenever?

Yes.

Transfers of previous tax year's/years' Cash ISA funds can be made at any time, whether to your then new current tax year's (2009/10) ISA provider or a totally different one, as long as they accept transfers.

Baldur

mr_sharma wrote: »

But is the allowance cumlative. E.g.

first year £3,600 with Egg,

close account transfer to ING Direct, top up with another £3,600 (to make £7,200)

close account transfer to Halifax, top up with another £3,600 (to make £10,800)

From my (new!) understanding you can have £3,600 each and every year scattered across various accounts. I don't know why but I like the idea of consolidation!

You DO NOT close ISA accounts you TRANSFER them by completing the new provider's transfer forms - they then arrange the transfer.

You can consolidate or have separate accounts, whichever you prefer or whichever is possible, i.e. you cannot usually transfer additional funds into a FRISA - or if I consolidated in a single institution I would be on the FSCS compensation limit.

Yes ISA funds & accrued interest are cumulative, as per your examples, except that you have forgotten the interest which is also accrued to the totals.

mr_sharma

Right ok, thanks for all your help. I have to say I thought I had a grasp on ISAs two years ago, clearly not.

If Icesave hadn't gone down the pan I'd be still living a lie!

Thanks for all your help

Fash

Sorry I'm new to this and am a bit confused. Does this mean that the interest gained on an ISA remains tax free and is added on to the interest you receive on the ISA the following year. I'll try to explain:

Complete 1st year ISA = £3600 + interest at end of 1st year
Complete 2nd year ISA = £3600 + interest from 1st year = is included on interest for 2nd year?

Hope this makes sense????
Thanks
Fash

Lokolo

1st Year ISA = £3600
2nd Year ISA = (1st Year ISA + interest) + £3600
3rd Year ISA = (1st Year ISA + interest + interest) + (2nd Year ISA + interest) + £3600.

And so fourth.

Interest inside the ISA remains tax free.

You can put £3600 in each tax year, not just once.

Fash

Wow - thank you so much Lokolo - I thought you only received interest on each ISA on each tax year so have always taken the interest out and spent it rather leave it sitting! I didn't realise it was cumulatively tax free - will definitely leave it from now on.
Thanks again!
Regards
Fash

bronzemonkey

Rikki wrote: »

You cannot add April 2009's allowance to your existing fixed rate deal. It will have to be a new ISA.

I'm looking at the NR 4% fixed rate ISA and the T&Cs - 5.(a)(i) - says:

The initial deposit can be made into your Account by cash (branch accounts only*), cheque and by transfer from another Northern Rock account (subject to the Terms and Conditions applying to that account). Once your Account is opened and whilst the Fixed Rate Cash ISA is being offered further deposits can be made using these methods or by payment by BACS, CHAPS, FPS or standing order (subject to the Terms and Conditions applying to that Account).

Have I missed something? Could you explain where you got your information from? Thanks

Lokolo

That is fine, but if you do this and they then close the offer and you haven't filled up your allowance you have lost the rest of it.

Example: You want to have your ISA for 09/10 with NR in that fixed rate. You have £3,600 limit. You deposit £1,000. They close the deal. You cannot add anymore. You also cannot open another ISA to deposit the £2,600 because you have already subscribed new money to the NR account.

But yes you are correct, you can. Most fixed accounts don't allow additional deposits.

bronzemonkey

I see what you are saying. You can only make additional deposits while the NR deal is open.

So am I right in thinking that if I were to open this ISA with NR now and transfer my existing ISA funds to it, then come April I can either:

- deposit an additional £3600 in the NR 4% ISA, if the NR deal has not closed.
- open another ISA and deposit a separate £3600, if the NR deal has closed.

If that is the case, I'm quite happy with either scenario. Better to lock at least what I have now at 4% and then see what the options are in April.

However, the example you provided is surprising. Personally I wouldn't deposit just £1000 at first, but assuming someone did, I wasn't aware that you would be prevented from opening another ISA in the same year that you have made a deposit in the NR ISA. It's good to know though, thanks.

What about if you already have another cash ISA open? Would you be able to deposit the remaining £2600 into an existing ISA?