Transferring an ISA, and paying into the second one

Tom_Spilsbury

Hello –

I hope no-one minds me asking this question here, it's difficult to see if this has already been answered elsewhere.

I currently have a Cash Isa with Lloyds, but the interest rate is low. So far, in this tax year, I have transferred in £2100, meaning I am still allowed to transfer in another £3000.

I want to open a new Isa with Santander, which offers interest of 2.75% for the first 12 months. However, if I transfer my existing balance over from Lloyds, can I then pay in the remaining £3000 to the new Santander Isa, or am I not allowed given that I have already paid in money to the Lloyds Isa?

If it's not allowed, do I need to transfer in another £3000 to the Lloyds Isa to make sure I have topped up to my total annual allowance, and only THEN transfer the total balance of my Lloyds Isa to Santander?

Many thanks for any advice.

Paul_Herring

Tom_Spilsbury wrote: »

However, if I transfer my existing balance over from Lloyds, can I then pay in the remaining £3000 to the new Santander Isa,

Since all of this year's contributions would then be with Santander, then yes, you can.

Tom_Spilsbury

Paul_Herring wrote: »

Since all of this year's contributions would then be with Santander, then yes, you can.

But they wouldn't, I'm afraid. I've already paid £2100 into the Lloyds Isa during this tax year. So I have to continue paying into the Lloyds Isa before transferring, yes?

Or am I still misunderstanding? If the Lloyds account is then closed, I can carry on paying into Santander, as that would be my only existing active Isa?

Paul_Herring

Tom_Spilsbury wrote: »

But they wouldn't, I'm afraid. I've already paid £2100 into the Lloyds Isa during this tax year. So I have to continue paying into the Lloyds Isa before transferring, yes?

Or am I still misunderstanding? If the Lloyds account is then closed, I can carry on paying into Santander, as that would be my only existing active Isa?

The latter.

An "Open ISA" (HMRC definition) is an account containing this year's contributions, regardless of whether that was the account the contributions were originally contributed to.

The Santander account becomes your "Open ISA" account when it receives the contributions, the Lloyds account ceases to become your "Open ISA" account when the funds leave.

What the rules are there to prevent you doing, is (to use your position) moving the funds from Lloyds to Santander, then continue contributing to the (now empty) Lloyds account, but still allow you to contribute the maximum (to Santander.)

Tom_Spilsbury

Paul_Herring wrote: »

The latter.

An "Open ISA" (HMRC definition) is an account containing this year's contributions, regardless of whether that was the account the contributions were originally contributed to.

The Santander account becomes your "Open ISA" account when it receives the contributions, the Lloyds account ceases to become your "Open ISA" account when the funds leave.

What the rules are there to prevent you doing, is (to use your position) moving the funds from Lloyds to Santander, then continue contributing to the (now empty) Lloyds account, but still allow you to contribute the maximum (to Santander.)

That's very helpful, thank you.