Is an ISA transfer classed as a new ISA

psm_2

I have a 60 day ISA that I have not paid any money into this year (2009/2010) with RBS. I found out I was only getting 0.1% interest on this account. RBS offer an instant access ISA giving 3.5% but would not allow me to transfer all of the 8k into it. I therefore opened a new ISA and withdrew £3600 and paid it into the new ISA. Can I open another ISA with a different bank and transfer the remaining amount or does this violate the rules?

baby_boomer

When did you open the new ISA? 2008/9 or 2009/10?

If asked for an official transfer, you wouldn't have lost any allowance - but having done it yourself, you can't open another ISA and deposit cash yourself in 2009/10 if your new one was opened on April 6th 2009 or after.

You can still transfer your original remaining balance to another ISA with either your new provider or another provider who allows transfers in with no new money. But the new provider must arrange the transfer - not you. Otherwise you would be breaking the tax rules. If you do it the Revenue treats the money as "new" money - not a transfer.

adecor

If you transfer an ISA it has to be done by the new ISA provider - some do this and some don't. You have to supply them with the details and they do the transfer. If you have done this yourself it is deemed as cashing in your prior year allowance & you will only be allowed £3600 for a cash ISA for this tax year.

G_M

I therefore opened a new ISA and withdrew £3600 and paid it into the new ISA.

This was a mistake. You have now used this year's ISA allowance. You should have requested the new provider to arrange the transfer of this money (or, indeed the entire balance) from RBS. You would then still have your 3600 allowance for this year which you could have added to the new ISA (or indeed, any other one).

Sorry.