can you transfer from 2 cash isas

paul2louise

My husband has recently opened the halifax fixed rate cash isa for 2 years with the min deposit of £500. He didnt realise that he can't many any further deposits to this Isa. He also has a Direct Isa issue 4 with the Alliance and Leicester. He was going to transfer this money into the halifax but now he isnt sure what to do.
I know he cant make any further deposits to either Isa this tax year.
What i want to know is what he should do next.

1. Can he wait until next tax year and open a new flexible isa and deposit both halifax and alliance and leicester funds. I know he will loose the interest on the halifax isa as he would have to close it before the end of term.
2. Can he transfer the alliance and leicester fund into the halifax this year, leave it there and then open a new isa next year with new funds (then he would have 2 isas)
3. Could he transfer the alliance and leicester fund into a new isa this year and refund this new isa next year. Then just leave the £500 in the halifax for the 2 years.

i hope this makes sense


thanks

rb10

There's no limit on the number of ISAs that you can hold.

The rule is: you can only pay new money into one ISA per tax year (this does not include transfers - you can do what you like with existing ISAs, whenever you like).

So your husband could now open a new fixed rate ISA with Halifax, but not pay any money into it. If he then fills out their ISA Transfer Form and either post it to Halifax or take it into a branch, then they will transfer the A&L ISA into a new Halifax ISA. He will then have two ISAs, but this is allowed.

He can then open a new one after April, and put up to £5100 into that between 6th April 2010 and 5th April 2011.

paul2louise

thank you, i will let him know his options

jamesd

Since he's only paid £500 into the Halifax ISA he has £3100 of cash ISA still available to use so he could close the Halifax ISA with £500 in it and open another with up to £3100 if he wanted to.

It's up to Halifax whether they would take the transfer from A&L now or not. Nothing in HMRC rules blocks it, only possibly Halifax rules. If they won't take the transfer now they might take it into a new one after closing the current one. Ask.

paul2louise

jamesd wrote: »

Since he's only paid £500 into the Halifax ISA he has £3100 of cash ISA still available to use so he could close the Halifax ISA with £500 in it and open another with up to £3100 if he wanted to.

It's up to Halifax whether they would take the transfer from A&L now or not. Nothing in HMRC rules blocks it, only possibly Halifax rules. If they won't take the transfer now they might take it into a new one after closing the current one. Ask.

I thought that because he has already paid into the Halifax he can't pay into any other cash isas. The 3100 is lost for this tax year. I presume that if he closed the Halifax ISA then he would have no further ISA options this year. Would it not be better to just let the £500 invest for the 2 year fix and start fresh next year.
Any thoughts

rictus123

I thought it was 1 each end of?

Nine_Lives

The way i understood it is that i fyou pay into 1 ISA in a tax year (so into the Halifax of £500) then he can pay £3,100 yes, but ONLY into that Halifax account. He can't open ANOTHER isa and pay £3,100 into the newly opened one. He wuld need to wait until the next (2010-11) tax year to be able to pay into another ISA.

I could be wrong, but that's my understanding of how ISAs work

Mikeyorks

paul2louise wrote: »

I thought that because he has already paid into the Halifax he can't pay into any other cash isas. The 3100 is lost for this tax year. I presume that if he closed the Halifax ISA then he would have no further ISA options this year. Would it not be better to just let the £500 invest for the 2 year fix and start fresh next year.
Any thoughts

Partially depends how desperate you are to use the remaining £3100 before 5th April. If not desperate ... leave it as it is but consider doing the A&L transfer into another fixed rate Halifax ISA - which is allowed.

If desperate .... close the fixed rate Halifax (but be aware there is a 180 day interest penalty - and they can take this from the £500 capital). Take the £500 and you can then open another ISA elsewhere with the full £3600. It's called 'self-transfer' ..... and is allowed under HMRC guidance. But you must fully close the Halifax ISA before opening the further one.

A word of caution. If you attempt to open the 'further' one with Halifax .... they may block it. It's fully allowed ...... but their systems and people are unlikely to know that.

jamesd

paul2louise wrote: »

I thought that because he has already paid into the Halifax he can't pay into any other cash isas. The 3100 is lost for this tax year.

Not so. See the HMRC Guidance Notes for ISA Managers. You're able to:

Transfer the opened one to another and add money up to the 3600 limit to the other one, total 3600 between the two.

From 2009-10 tax year you can also do a self-transfer, withdrawing all of the money deposited in one cash ISA and placing up to the annual cash ISA limit of that money into another cash ISA. See part 12.32a on page 119. This seems like the best option that fully complies with the rules.

"For Example Mrs Cooper subscribes £3,000 to a cash ISA with Anybank plc on 20 April 2008.
She closes it on 30 November 2008, then subscribes to a second cash ISA with
Betterhomes Building Society on 3 December 2008. The subscriptions to the
second cash ISA are valid."

Prior to 2009-10 tax year it was only the difference between 3600 and the amount paid into the other one in the current tax year that could be deposited after a closure.

Moving on to technical breaches of the rules that are accepted, you can open a second or third or more ISA and HMRC will do no more than send you a letter saying you've broken the rules provided the total paid in does not exceed the annual limit. If it goes over the limit HMRC may tell the ISA manager to refund the excess to you. You won't be able to open a second account with the same ISA manager - two at Halifax say - because their systems are supposed to block it.

"In general, the invalid subscriptions can be repaired to the extent that the total
subscriptions in the tax year to the two ISAs do not exceed £7,200, and
subscriptions to cash ISAs do not exceed £3,600"

"For Example Mr Johnson subscribes £3,000 to a cash ISA with Betterhomes Building Society in
August 2008. In March 2009 he subscribes £3,000 to a cash ISA with
Superiorhomes Building Society. None of the subscriptions are used to purchase
insurance products. The subscriptions to the Superiorhomes Building Society are
invalid, but repairable. The total subscriptions are £6,000, which exceeds the
£3,600 cash ISA subscription limit. The excess subscriptions of £2,400 must be
removed from the Superiorhomes Building Society ISA, but the other £600
subscriptions can be repaired."

If you have concerns or doubts I suggest that you phone the HMRC ISA helpline.

If over the age threshold the 3600 is 5100 for this tax year and it's 5100 for everyone in the coming tax year.

C_Mababejive

I did this last year. I TRANSFERRED two existing,low performing ISAs (2 different providers) to one newly opened ISA. I was informed by the new ISA provider that this did not constitute use of my ISA allowance since i was transferring existing/old money. I therefore still had not used up my ISA allownace for that year.

Come to think of it,is there any checking mechanism for whether youve used up your isa allowance or not? Sometimes its hard to keep track and it would be useful to ring some place? I guess there isnt??

Has anyone erroneously opened more than one isa and been notified/told off/whatever??

Baldur

C_Mababejive wrote: »

Come to think of it,is there any checking mechanism for whether youve used up your isa allowance or not? Sometimes its hard to keep track and it would be useful to ring some place? I guess there isnt?

Not for savers, the check is via your National Insurance Number (NINO), which is audited by HMRC through ISA providers' statistical returns.