Question about moving Isas

sapphire_nick

Hello

I am new here so, hello!:)

I have currently got a Leeds and Holbeck Loyalty ISA that I have had for a few years.

So far I have £32466 invested in the account which includes an investment of the £3,600 into the account for the current tax year. I made this investment on 11th April 2009.

I have noticed that the Leeds and Holbeck ISA gives 1.5% interest, which is not a great deal. I did open a Santander Direct ISA Issue 3 but I haven't transferred anything into it yet (I may have missed my chance) which has a promotional rate of 3% (goes down to 0.5% after 12 months).

What I was considering doing was to invest £30,000 of my Leeds and Holbeck Isa into the Santander one for a year (to benefit from the double interest).

What is concerning me, though, is whether I can transfer that £30,000 back into my Leeds account (with interest earned) from my Santander account when the rate returns to o.5%?

Or - will the fact that I have already removed the money from Leeds mean that I can no longer reinvest the money with Leeds?

Hope someone can clarify this?

gmang

It depends if Leeds and Holbeck allow transfers in. Honestly, 1.5% is pretty low, and calling it a "loyalty" ISA is a bit cheeky. I'd move the lot into the 3% one then move it all again in 12 months into the best buy at the time.

sapphire_nick

They say that they don't charge to transfer in. Is it really that simple, then?
It is very cheeky indeed!
Is it worth keeping any money in there at all? I think their basic amount is £1

So - with all providers, do I need to just check that they allow transfers in?

gmang

Yes, some providers allow transfers in, and some don't. Typically if they have a very good deal (like Santander's current 3.5% deal) they don't allow transfers in to limit the amount people can invest (i.e. only that year's ISA).

I don't see any reason for you to keep anything in the old account. Just make sure you DON'T move it into a non-ISA account before transferring it or you'll lose the tax free status. Just get a transfer form from your new ISA provider and fill in the old account details. They'll manage the transfer for you.

Simples!

sapphire_nick

brilliant! Thanks for that!

I am not sure if I can still actually do it with my Santander issue 3 isa. Will contact them and see what the story is.

By the look of things, Leeds only want £1 to keep the account active.

If I transfer now - what happens to all the interest earned in 2009?

Also - when it comes to the next tax year and I want to invest a new £5,100 into the 2010 tax year am I entitled to see if anyone is offering promotional fixed rates and open a new, separate ISA for next year?

gmang

You'll get all your interest up to the date you transfer. It will be added onto the final balance if you move all of your money. If you keep £1 in the account then the interest will be paid as normal (usually every 12 months). Which is another reason to close it fully!

In each new tax year you can open a new ISA with a new provider, if you choose to. The best deals often don't allow transfers in, but have 12 month bonuses. So, you end up having to open a new one with new money each year, while at the same time finding a home for your old one which has reverted to 0.5%. I find this all too much hassle so I only bother with ISAs which allow me to move my entire balance in one go.

Also - welcome to the forums!

sapphire_nick

Okay, great - thank you!

I see that Leeds have something that caught my interest....This account seems to suggest a return minimum of 10.25% after 6 years...

So, guaranteed minimum I can get back from my investment is 10.25% - I would get this in 2016. Right?

Basically - I have to leave the money there for 6 years, but am guaranteed minimum of 10.25% but up to 60% growth...

This means that if £10,000 was to be invested, I would get £1,025 P.A. minimum per year. Thats around £6k interest on a 6 year investment.... Surely this can't be?

I can't post links as I am new but - below is the info:

Savings & Investments

Guaranteed Capital Account 32
Cash ISA Option

You could earn up to a maximum of 60% growth (Tax-free¹) based on potential FTSE®100 Index growth during the full term of the account.

With a guaranteed minimum of 10.25% growth (Tax-free¹) at maturity.

Guaranteed Capital Account 32 features at a glance

Capital return guaranteed at Maturity Date (27 April 2016)
Account can accept cash ISA subscriptions for the 2009/10 tax year and cash ISA transfers
Minimum investment £3,600
Account must be held for the full 6 year term
Early closure of the Account will result in an Early Exit Fee and you will get back less than invested
No interest is payable on the Account. The return on the Account is determined by the performance of the FTSE®100 Index.
This Account must close by 1 April 2010.

This Account is not available to be opened online or by post and can only be opened in your local branch or by appointment with a Society Financial Planning Manager.