2 Cash ISAs

hairclip_2

Hi all, can anyone tell me if this is correct in my understanding...
I have a cash ISA with a really poor AER. It was taken out in early 2008. I make a monthly payment into this account and have done since it opened. However, I'am now looking to open another Cash ISA with the another bank but at a better AER.
I'am correct in assuming I can do this and still continue to pay a monthly subscription into BOTH ISAs as I wish to keep BOTH open.

KingL

No (mostly)

The money you paid into it from early 08 to March (ish) 08 would have been set against your 2007/08 ISA allowance
The money you paid into it from April 08 to March 09 would have been set against your 2008/09 ISA allowance
The money you paid into it from April 09 to the present would have been set against your 2009/10 ISA allowance

Therefore you have already subscribed to an ISA for this tax year, so you cannot open and fund a brand new one.

You can probably transfer the balance (from all three years) into a new empty ISA at a better rate and then continue to pay this year's money into that new one. But check whether your existing one will allow this (who is it with and what is it called?). Make sure you use the transfer process.


ps if you really wanted to, you probably could transfer part/all of previous years contributions to a new ISA and keep on paying this years money into the existing one. This would allow you to keep both open, but I'm not sure why you would want to keep the lower rate going when you could have a better rate on all 3 years' worth..

.

Baldur

hairclip wrote: »

I have a cash ISA with a really poor AER. It was taken out in early 2008. I make a monthly payment into this account and have done since it opened. However, I'am now looking to open another Cash ISA with the another bank but at a better AER.
I'am correct in assuming I can do this and still continue to pay a monthly subscription into BOTH ISAs as I wish to keep BOTH open.

You can only subscribe (pay new money into) to ONE Cash ISA per tax year (6th April to 5th April).

You could transfer the existing Cash ISA to a new provider that pays a better rate and accepts ISA transfers and, after the transfer has taken place, could continue to subscribe any balance of your current tax year's allowance to it.

hairclip_2

right ok...so really what i need to do is open a new ISA and transfer my existing balance over yeah..so is it better to open one at the start of the new financial year (next April) transfer the balance over then, then close the old one with the rubbish rate!
In answer to your question KingL my existing ISA is a EGG Cash ISA...I'll check the balance is transfereable.

Lokolo

hairclip wrote: »

right ok...so really what i need to do is open a new ISA and transfer my existing balance over yeah..so is it better to open one at the start of the new financial year (next April) transfer the balance over then, then close the old one with the rubbish rate!
In answer to your question KingL my existing ISA is a EGG Cash ISA...I'll check the balance is transfereable.

You don't transfer like you would normally.

When you transfer an ISA you have to fill in a form and send the form to the old provider (in this case Egg).

You can transfer anytime of the year, there is no point waiting around as in the meantime you are getting a crap rate.

hairclip_2

ok thanks for that..this may sound really dumb but the max im allowed to invest in a cash ISA is 3600 per tax year...so what happens if i transfer say 6000 over from my existing ISA into a new ISA..have I then over subsribed for that year. Or is how much im allowed to pay into my new ISA for that year then based on how much of my tax free allowance ive used so far for this finanacial year with my old ISA.

Lokolo

hairclip wrote: »

ok thanks for that..this may sound really dumb but the max im allowed to invest in a cash ISA is 3600 per tax year...so what happens if i transfer say 6000 over from my existing ISA into a new ISA..have I then over subsribed for that year. Or is how much im allowed to pay into my new ISA for that year then based on how much of my tax free allowance ive used so far for this finanacial year with my old ISA.

Transferring doesn't count as subscribing.

Subscribing means putting new money in.

The bold bit is correct.

Paul_Herring

hairclip wrote: »

ok thanks for that..this may sound really dumb but the max im allowed to invest in a cash ISA is 3600 per tax year...so what happens if i transfer say 6000 over from my existing ISA into a new ISA..have I then over subsribed for that year. Or is how much im allowed to pay into my new ISA for that year then based on how much of my tax free allowance ive used so far for this finanacial year with my old ISA.

Transfers (and interest) don't count as 'putting money in.' Only money you've added to the old account since April this year counts against your £3,600 limit.

So after you've transferred, you can add an additional (£3,600 minus what you've contributed so far this year.)