ISA question

Steve_xx

Assuming you are aged 50+ and you have used your cash ISA allowance for the current year (£3600) in one account, with one provider, can you then put the remaining £1500 into another cash ISA and with a different provider?

p00hsticks

No, I don't believe you can. My understanding is that you must either add the money to the existing cash ISA (if the provider permits it) or transfer the ISA to a new provider.

Steve_xx

p00hsticks wrote: »

No, I don't believe you can. My understanding is that you must either add the money to the existing cash ISA (if the provider permits it) or transfer the ISA to a new provider.

I'm asking this on behalf of a friend.

In my own case I used the same provider for the £3600 and the remaining £1500. However, the £3600 was put into a bond type ISA that subsequently became a closed issue. So I opened a fresh ISA with the same provider for the remaining £1500. So that's what's making me wonder if it would be possible for my friend to open a secondary account with another provider for his remaining £1500 allowance. He doesn't want to use the existing provider for the remainder because he too has his £3600 in a closed issue bond type ISA, like me.

p00hsticks

Steve_xx wrote: »

So I opened a fresh ISA with the same provider for the remaining £1500.

Yes you're right, I should have said that you had to use the existing provider rather than the existing ISA. As you say, you are allowed to open more than one cash ISa in a year if they are with the same provider - but I don't believe you can do it with more than one provider.

KingL

The HMRC rule is one one ISA subscription per year. You can sometimes get around this by using a single provider as they can treat the two subsciptions as two accounts within the same ISA (i.e. HMRC sees it as a single ISA). You can't get this 'workaround' across two different providers.

He doesn't want to use the existing provider for the remainder because he too has his £3600 in a closed issue bond

has he checked that it is actually closed - some providers made an exception for the unusual circumstances of this year's mid-year change of rules.

Steve_xx

KingL wrote: »

The HMRC rule is one one ISA subscription per year. You can sometimes get around this by using a single provider as they can treat the two subsciptions as two accounts within the same ISA (i.e. HMRC sees it as a single ISA). You can't get this 'workaround' across two different providers.

has he checked that it is actually closed - some providers made an exception for the unusual circumstances of this year's mid-year change of rules.

Thanks, yes it is definitely a closed issue. I think he will have to bite the bullet and take the supplementary ISA out with the existing provider.

Lokolo

Steve_xx wrote: »

Thanks, yes it is definitely a closed issue. I think he will have to bite the bullet and take the supplementary ISA out with the existing provider.

He can always just open the easy instant access ISA and then transfer out elsewhere.

Steve_xx

Lokolo wrote: »

He can always just open the easy instant access ISA and then transfer out elsewhere.

He wants to leave the closed issue bonded ISA as is, because it's paying 5%. He wanted to open the supplementary ISA with another provider because another provider would pay better rates than the current.

Lokolo

Steve_xx wrote: »

He wants to leave the closed issue bonded ISA as is, because it's paying 5%. He wanted to open the supplementary ISA with another provider because another provider would pay better rates than the current.

Yep thats fine but does the other provider accept transfers? As said, he can open another instant access ISA, add the extra in, then transfer it out to another provider which does have better rates.

Steve_xx

Lokolo wrote: »

Yep thats fine but does the other provider accept transfers? As said, he can open another instant access ISA, add the extra in, then transfer it out to another provider which does have better rates.

Ah yes I see what you mean. I think he'll be better to open the supplementary ISA with the current provider and then hang fire until next tax year when he can open a fresh ISA with another provider and then pull the £1500 into that one.

Mikeyorks

Steve_xx wrote: »

He wanted to open the supplementary ISA with another provider because another provider would pay better rates than the current.

As earlier ...... but he can't do that.

However .... whilst the fixed rate product that his £3.6k is in may be 'closed' ...... has he actually checked with the provider as to whether they will accept additional funds in it? As the fine print sometimes yields surprises. This, for example, from the Halifax (fixed rate ISAs) ...... where I certainly didn't expect them to be so accommodating with products that are 'closed' as soon as a first payment is made to them :-

However, if you are aged 50 or above on or before 5 April 2010 and you have funded your fixed rate ISA with current year funds you can make a one-off extra payment into your account before 6 April 2010 so you can take advantage of the new ISA limit of £5,100.