Multiple ISAs in 1 tax year

Stingy_Samson

Hi there,

Does anyone know whether it is possible to open more than 1 cash ISA in the same tax year (assuming the first one that was opened was never deposited into)?

The reason i ask is that i eventually got my 10K ish back from my Icesave ISA and have kept it in the Egg 6.3% fixed account since November. However i did setup a new cash ISA with Natwest that i was going to transfer the funds into (i have my ISA letter so i could do this if i wanted).

But now the interest rates fro the Natwest cash ISA are terrible, (initially i tried to get the 2% bonus and thereafter the 1.76% bonus) but i think if i transfer it now, it will just earn the flat standard pittance.

So i was wondering whether i could find the best rated ISA before April and transfer the money sat in my Egg account to it.

And then it brings up another debate. I know you would lose all the ISA tax benefits accrued if i do not get it in somewhere before April, but how much interest would you earn on 10K in a 6.3% savings account in a year as opposed to say a 3% ISA in a year. Is the difference that big?

Any thoughts or figures most appreciated.

KingL

Yes you can open two in a year if you didn't pay anything into one of them.

You'd get £300 pa tax free on the ISA or £630 Gross on the savings account. If you pay tax at 20% that would be £504 net. If you pay tax at 40% it'd be £378.

The point with the ISA is that you keep the tax protection forever. If in four years time the differential levels out or in the future you start paying higher tax, you might regret ditching the ISA. It's a personal choice

Paul_Herring

Stingy_Samson wrote: »

Hi there,

Does anyone know whether it is possible to open more than 1 cash ISA in the same tax year (assuming the first one that was opened was never deposited into)?

For the purposes of the ISA rules "open" means in layman's terms "an account with money deposited in."

Just because the bank has opened an account for you, does not make it "open" in the ISA sense.

Stingy_Samson

Thanks for the info guys.

I definately want to keep the ISA wrapper in tact so i think i will transfer as planned into the ISA.

I opened up a Natwest e-ISA this afternoon which (over 10K) currently pays 3.51% AER.

I have just unearthed another surprise now though. Reading through my letter from Natwest back in November, they are telling me that i can still get the 1.76% bonus for 1 year once the funds arrive into the (standard) Cash ISA, so this would currently earn 3.30% AER.

So at the moment i am happy with the e-ISA rates, however could anyone tell me the chances of Natwest reducing rates on the e-ISA more so than the standard cash ISA?

Why do banks offer a much better rate on an e-ISA as opposed to a standard cash ISA?

Is there any point in me putting it in the standard cash ISA (inc 1 year bonus) considering the e-ISA still pays more interest overall?

So many questions, i need a crystal ball!