ISA's help

mightyreds

Hi,

I will have around 3000 in my ISA for 2010/2011 period in a Barclays Issue 2 ISA. I can't remember the exact rates but I'm guessing it had an introductory rate and this will drop come April.
Now what I don't know what to do is when the new deals come out in April should I take this money out of the ISA it is in now and into the latest ISA or leave this money where it is and start saving again into my new ISA?
Or should I put it all into my new ISA and once I reach the threshold of 5100 start using a standard saving account?

Thanks

Loughton_Monkey

Do not 'take it out' of the ISA [unless, of course, you want to spend it]. Once you take it out, that ISA allowance has been 'used' and cannot be re-used.

What you do in these circumstances is open a new one. Find one at satisfactory rates that allows transfers in [care, because they do not all allow transfers in]. Then, having opened the new one, you ask the new bank/building dociety to transfer the other one in. Just give them all the details and they do it. You would not contact Barclays about this (a) because there is no need, and (b) it might only confuse matters.

mightyreds

Thanks for the reply. So what is the difference between transferring the money into the new one and just taking the money out and putting it into a new one?
I understand the money cannot be replaced once removed but if I don't understand if it is going to be removed from the original one anyway.
I'm not that good when it comes to ISA's!

Loughton_Monkey

mightyreds wrote: »

Thanks for the reply. So what is the difference between transferring the money into the new one and just taking the money out and putting it into a new one?
I understand the money cannot be replaced once removed but if I don't understand if it is going to be removed from the original one anyway.
I'm not that good when it comes to ISA's!

We all get £5,100 allowance per tax year. (Going up slightly for April, but just run with the principle]. So yes, you can physically withdraw your £3,000, plus a bit of interest probably, but when you put it into your new ISA in April, you will have used up £3,000+ of next year's allowance, and so can only put in a further £2,000-ish.

The ISA tax free wrapper is 'one way traffic'. While in the ISA it is tax free. When you want the money to appear in a better ISA, then transferring it [your bank does this keeping HMRC fully advised] means that it retains full tax free status, and ensures that your new limits each tax year remain fully available to you if you want them.

If you were absolutely sure that you will put less than about £2,000 into next year's ISA then you could simply take it out in cash, and then pay it back in next year. But personally I see no real advantage in doing this, since transferring it keeps all your options open.

mightyreds

Loughton_Monkey wrote: »

We all get £5,100 allowance per tax year. (Going up slightly for April, but just run with the principle]. So yes, you can physically withdraw your £3,000, plus a bit of interest probably, but when you put it into your new ISA in April, you will have used up £3,000+ of next year's allowance, and so can only put in a further £2,000-ish.

The ISA tax free wrapper is 'one way traffic'. While in the ISA it is tax free. When you want the money to appear in a better ISA, then transferring it [your bank does this keeping HMRC fully advised] means that it retains full tax free status, and ensures that your new limits each tax year remain fully available to you if you want them.

If you were absolutely sure that you will put less than about £2,000 into next year's ISA then you could simply take it out in cash, and then pay it back in next year. But personally I see no real advantage in doing this, since transferring it keeps all your options open.

Ahhh so transferring from an already existing ISA won't use up any of the new years allowance? Definately looking to transfer then if that's the case. Thanks for the advice!

newcastleneil

The answer to your last question is No it wont affect your 2011 allowance