Conflicting ISA info ... girl needs unconfusing

sarahsessions

Hi, seeking some help - sorry for long post but wanted to get all the detail down.

I have read the ISA guides, read posts and phoned two banks today and got contradicting info and from then and then I was advised to phone the FSA who were not sure of the answer and asked me to contact HM Treasury. I am planning to call them tomorrow but wanted to raise it on this forum in case someone could explain it in simple language and because others may be in a similar situation. So I am hoping someone can help.

Facts:
In November 2008 I took out a cash Fixed Rate ISA with a building society. The reason I took it out at that time was because I had some savings and the fixed rate was very high - I did not consider the impact of timing - being Nov. 2008.

This FY (financial year) I am looking to take out another Cash ISA with a one deposit of the full cash allowance.

My Question:
In October 2009 my existing ISA will be at the end of its 12 month deal and then will sit in an account earning 0.05% and I am not sure of my options to maximise return.

One bank said that in Nov. 2009 I could transfer the funds in the ISA to a 'new' ISA as it would be for funds from a previous FY ISA - i.e. not 'adding to' an ISA in existing FY. Thus I could take out an ISA for this FY allowance AND in Nov. 2009 open an ISA account for my previous years ISA fund. This assumes that an ISA I take out in Nov.2009 allows transfers in.

This answer has confused me as I understood that you cannot open two ISAs in one year but the Bank said that technically I am not opening two new ISAs - one is a roll over for previous FY ISA and one is for this FY ISA allowance. Thus in theory I could have a number of ISAs operating in one year in different banks one for each financial years allowance(although it would be easier to manage them all by transferring all into one ISA). The restriction is that I do not open two ISA for the same financial years allowance. This, they said, is similar to the practice of opening a new ISA this year and transferring funds in to it from previous years ISA's - you are in effect rolling forward previous years ISA's - again assuming transfers in are allowed. I did ask the rep to get this confirmed and they did so - thus I was initially convinced this was correct.

I then phoned another Bank and was clearly told:

No way can I open an ISA this FY and then open another in NOV. 2009 for my existing ISA. Furthermore if I wanted to transfer previous years ISAs into this years it would have to be done at the time of opening the ISA. He added that I should not have taken out an ISA in November, I should have done it in April so that I could have transferred it into this FY ISA - i.e. This year I could of had an ISA for £3,600 + fund from previous ISA.

So my only option is to open an ISA for this FY and then think what to do with the money in my existing ISA which after Oct 2009 will be only earning 0.05%. I assume I could put it in a better rate savings account but then wouldn't I loose it’s 'ISA' status and miss out on the option for it to be added to a new ISA ?

I decided to call the FSA and a rep told me that she understood the query yet was unable to say if the information from the first or second bank was incorrect and she was unclear if a previous years ISA fund could be rolled forward into a 'new' ISA account if another ISA for this FY had been opened and the full allowance used. She said it was a technical issue which I would need to speak to HM treasury for an answer.



Apologies if my post is confusing and the wrong terminology used - I have tried to accurately repeat what I was told by the banks and reps. I found it difficult to set down what I mean and so I hope I have sufficiently explained the scenario. If you need any more detail or clarification of the circumstances then I am happy to try and answer/provide. Any feedback is greatly appreciated.

Kindest Regards
Sarah x

pbw

hi there, the 1st bank is correct! you can have as many isa accounts as you want. though you can only contribute to a single isa in any 1 year.

therefore, you can open an isa now and put in the 3.6k and then when the old isa matures in october, you can open another isa that accepts transfers in and then transfer the old one.

hope its clear, i will clarify any more doubts you may have

Money_Grabber13579

Or if you wished, you could just fix your existing ISA for another year.

Or, another option, wait until November, add to the existing ISA and then fix it again! It can get a bit annoying when there is an ISA for every year floating about! I just prefer having one!

turbobob

Had to have a chuckle about the FSA not knowing and telling you to ring the Treasury!!

Just to clarify, if you want to transfer last tax years ISA to another provider, make sure you fill in a transfer form with the new provider and have them arrange it. Do not withdraw the cash yourself. This FAQ on the HMRC site covers it - http://www.hmrc.gov.uk/ISA/faqs.htm#6

Baldur

Sarah,

I also have a fixed-rate ISA which matures in October 2009 (and have had many others over the years which have matured other than in April) this will be transferred either to one of my existing Cash ISAs which permits inward transfers or, if the rate offered by a different ISA provider that accepts transfers is better, it will be transferred to that provider.

As other posters have shown, the 'advice' that you have received, other than that from the first bank is absolute rubbish.

Just select your new provider (that accepts ISA transfers) in November, complete their ISA transfer form and let them arrange the transfer of your matured FRISA's funds.

sarahsessions

Wow! what a response thank you all so much ! I'm sorry if the answer was obvious - I wish I had posted on here before getting the run around. I will follow your advice and open a new ISA and then review the options for my existing ISA come Nov 2009. I wish I could return the help but as you probably have guessed my finanacial expertise is limited however I am a Ward Sister so any medical questions please let me know .

Thanks again for all your help it is really appreciated and I wish all the best.
Kindest regards
Sarah xxxxxxxx

david78

Do not be afraid to ask here. The banks and building societies often confuse themselves over the rules. Whereas the information on here is usually spot on and up to date. You will soon become an expert too.

jamesd

The actual rules are;

1. For money from past tax years: you can move this between as many different ISA accounts as you like, even thousands if they are all the same type, cash or stocks and shares. You can also move money from cash to S&S but not the other way.

2. For money from this year you can have one open cash ISA and one open S&S ISA that you have contributed money to in the current tax year. You can transfer all contributions in one or both of these accounts to another of the same type provided you transfer all money in the account, including all from past years, and close the account with the transfer. New contributions during the same tax year must be made to the one you have moved to. You can repeat this move as often as you like, limited only be the time it takes. You can also transfer money from a cash ISA to a S&S ISA and it is then treated as if you had originally made it to a S&S ISA, not a cash ISA. So 3600 into cash, move to S&S and you get another 3600 of cash contributions allowed if you like.

In addition the places that operate ISA accounts often have restrictions not required by the rules. Things like only allowing transfers out of the whole amount even for past years or not allowing transfers in. For these things you can just choose a different provider.