Can I close down my LLyods ISA to transfer to NATWEST?

zedyy

I went into Natwest today and the lady said that since i already have a llyods Cash ISA the best way to get my £3600 allowance for this year then top it up in April (new tax year) would be to close my Llyods TSB ISA down, ask llyods for a cheque for the £3600 i have with them ( at a dismal 1%) and then put it into the Natwest (3.5%) ISA?

Im worried that I will be breaking the rules, is she telling me the right thing as I don't trust people in banks nowadays..

whu

You should not close the Lloyds ISA or you will lose its tax free status and not be able to replace that allowance of £3600 -also if you have opened an ISA this year which you seemed to have done you can't put money into another one in the same tax year- if you want to transfer to Natwest and if they allow transfers in then sign a form in the branch and they will arrange the transfer from Lloyds- you can then use the 09-10 allowance to either add to the Natwest ISA or open another ISA - hope that helps

zedyy

Umm.. well, I'm only getting 1% at Llyods so I was advised to close it and put the money into Natwest, so that for 09/10 i would have £7200 (£3600 in llyods + new years ISA) earning 3.5% as opposed to a mere 1% at LLyods.

Can anyone tell me if this would be a financially sound thing to do??

sheslookinhot

You can't open two ISA's in the same tax year.

whu

As I mentioned above if NW allow transfers in then transfer the Lloyds ISA to Natwest and add to it next year - then you will have £7200 in the higher paying ISA (also just to clarify from my previous post - you can't open 2 ISA's in the same year)

SalsaDanca

The rules are that you can only pay money into one cash ISA during a tax year, and you cannot pay in more than £3,600. You can open as many ISAs as you like, it's paying money into them that would break the rules. Tax years run from 6th April to 5th April the next year.

Have you paid any money into your Lloyds ISA since 6th April 2008?

If you have, you would be breaking the rules if you tried to pay any money into a Natwest ISA before the 6th April, so don't get a cheque from Lloyds. Instead, you can open a Natwest ISA without paying any money in, then ask Natwest to transfer the money from your Lloyds ISA. As you won't be moving the money yourself, you won't be breaking the rule about paying money in. After 6th April, you are allowed to pay another £3,600 into an ISA. You could put it into your Natwest ISA, or you might want to open another ISA with another bank.

ozzage

SalsaDanca wrote: »

Instead, you can open a Natwest ISA without paying any money in, then ask Natwest to transfer the money from your Lloyds ISA.

For what it's worth, I did this exactly (Lloyds -> Natwest) late last year.

I will probably put £3600 on top come April, unless there's a significantly better option around.

zedyy

whu wrote: »

As I mentioned above if NW allow transfers in then transfer the Lloyds ISA to Natwest and add to it next year - then you will have £7200 in the higher paying ISA (also just to clarify from my previous post - you can't open 2 ISA's in the same year)

they dont:rolleyes: which is the reason she told me to close my llyods cash ISA down

zedyy

SalsaDanca wrote: »

The rules are that you can only pay money into one cash ISA during a tax year, and you cannot pay in more than £3,600. You can open as many ISAs as you like, it's paying money into them that would break the rules. Tax years run from 6th April to 5th April the next year.

Have you paid any money into your Lloyds ISA since 6th April 2008?

If you have, you would be breaking the rules if you tried to pay any money into a Natwest ISA before the 6th April, so don't get a cheque from Lloyds. Instead, you can open a Natwest ISA without paying any money in, then ask Natwest to transfer the money from your Lloyds ISA. As you won't be moving the money yourself, you won't be breaking the rule about paying money in. After 6th April, you are allowed to pay another £3,600 into an ISA. You could put it into your Natwest ISA, or you might want to open another ISA with another bank.

I have £2K sitting in my llyods cash ISA right now. Natwest do not allow transfers IN.

fablad75

If you put £3600 into your Lloyds ISA after 5th April 2008, then you've already used up your allocation. Closing it down will be useless, as you wouldn't be able to re-deposit the money into another ISA until the next financial year.

ozzage

Ahh you're looking at the standard Natwest Cash ISA Plus, by the looks of it.

Natwest DO allow transfers in for for the e-ISA at 3.25% AER. Why not transfer it there? It's much better than what you're getting now and in reality the interest won't be THAT much different from the other one...