WHEN to transfer ISA's - Confused.

pressuredrop_2

catslovelycats wrote: »

Or does it have to be put in within the tax year?

Yup, the allowance has to be deposited during the tax year.

Funkyfreddy

catslovelycats wrote: »

I'll try, but not sure if this is any clearer:
I have a cash ISA with less than £5100 in it.
I opened it in July and the rate lasts a year.
As its duration runs across the tax year, does it mean I can keep putting money in (up to the maximum allowance) after April?
eg. say the balanace is £1000 and I put another £2000 in this side of April. Can I put in, say, £2100 between April and July - ie within the 12 month account period? Or does it have to be put in within the tax year?

If your balance is £1,000 (and that was deposisted in July 2010) you have £4,100 left of this years allowance to deposit before the 5th April 2011.

Even if you took the £1,000 out today you can still only deposit an additonal £4,100 before th 5th April 2011.

From the 6th April 2011 (2011/2012) tax year the timer is reset and running again until 5th April 2012.

In that time you can add up to the allowance again, increased to £5,340.

As an example, and if you had the available cash the balance of your Cash ISA could become £10,440 plus any interest added (depending on when interest is added to your balance) by the 7th April 2011.

Before 5th April: Add the remaining £4,100 of this years allwoance: balance £5,100

6th April 2011: Add the full £5,340 2011/12 allowance; balance £10,440

Any interest interest is in addition to your personal allowance and does not effect it.

Alternatively from the 6th April you could look at other Cash ISA offers - as the base rate may well have risen some "better" offers might be available with improved rates over the one you already have.

You can leave your "old" ISA alone and let it run until any introductory or fixed rate ends (when the rate will probably drop) and open and fund a different ISA in the 2011/12 tax year. AT some point you ould transfer the balance of this now "Old" ISA into your new one.

As with Interest transfers from previous years ISA's do not effect your perosnal allowance for that tax year.

FF

cslogg

My wife and both have a Barclays Golden Isa V2
We plan to wait until it has been in a year thereby collecting any bonus and then transfer both out.
Is this the correct way to do it.

cslogg

gregmac666

cslogg wrote: »

My wife and both have a Barclays Golden Isa V2
We plan to wait until it has been in a year thereby collecting any bonus and then transfer both out.
Is this the correct way to do it.

cslogg

This is exactly the question I came in search of an answer for.

I orignally opened an ISA around April 6th or 7th of a particular year, and I have waited for it to mature (receive my interest) each year before transfering it. Is this the best way to go about handling my ISA?

Surely if you transfer your ISA to another provider before the April 5th you would forfit any interest - am I right?

Also, if I opened (transfered into) a new ISA on 6th April 2011 I would not be able to open (transfer into again) another ISA within that fianncial year, or are transfers not actually counted as a new ISA?

Lokolo

gregmac666 wrote: »

This is exactly the question I came in search of an answer for.

I orignally opened an ISA around April 6th or 7th of a particular year, and I have waited for it to mature (receive my interest) each year before transfering it. Is this the best way to go about handling my ISA?

Surely if you transfer your ISA to another provider before the April 5th you would forfit any interest - am I right?

Also, if I opened (transfered into) a new ISA on 6th April 2011 I would not be able to open (transfer into again) another ISA within that fianncial year, or are transfers not actually counted as a new ISA?

No completely wrong

Any interest due to you will be paid on transfer. You will get interest for however long the money is in there for. So 6 months would get you half the annual interest etc.

Transfers are not counted towards using your allowance. You transfer by using an ISA Transfer Form with the new provider. They then transfer everything.

You can then choose to use your allowance by either topping up an existing ISA or opening a new ISA. You are only allowed to contribute to one ISA a year. Contributing means to put NEW money into.

rb10

cslogg wrote: »

My wife and both have a Barclays Golden Isa V2
We plan to wait until it has been in a year thereby collecting any bonus and then transfer both out.
Is this the correct way to do it.

cslogg

Yes.

However, bear in mind that transfers can take a few weeks to go through, so to minimise the loss of interest during this period, it's best to start the transfer process a few weeks before maturity of the existing account, unless one of the following applies:

1) You are transferring to Halifax or Nationwide - both of them will pay interest from the day they receive your transfer request form; and/or
2) The Barclays ISA has a penalty for early closure (typically this applies to fixed rate accounts); and/or
3) You receive a bonus for keeping the money in the account for a whole year (unusual for instant access accounts).

gregmac666 wrote: »

Surely if you transfer your ISA to another provider before the April 5th you would forfit any interest - am I right?

If the normal interest payment date is 5th April, and the account is transferred elsewhere before this date, then you will usually receive interest paid up to the date of closure.

The only exceptions are (2) and (3) above.

gregmac666 wrote: »

Also, if I opened (transfered into) a new ISA on 6th April 2011 I would not be able to open (transfer into again) another ISA within that fianncial year, or are transfers not actually counted as a new ISA?

Transfers do not count as new ISAs. The 'one ISA per year rule' is that you can only pay new money into one ISA per tax year.

So the following is permitted:

My ISA is currently with Bank A. I transfer it to Bank B, either now or in the new tax year (the tax year has no impact upon transfers at all). On or after 6th April 2011, I can then pay up to £5340 into this ISA, or open a new account and pay it into there.

Catslovelycats

This is so much more complex than I ever thought. So does this mean that £5100 isn't the maximum balance on a cash ISA?
I know it's the annual permitted allowance, but does it mean that an ISA with a £5100 balance in one tax year can have more money added to it in the next tax year?
If so, I can't believe that I had so misundertsood all this all these years!

rb10

catslovelycats wrote: »

This is so much more complex than I ever thought. So does this mean that £5100 isn't the maximum balance on a cash ISA?
I know it's the annual permitted allowance, but does it mean that an ISA with a £5100 balance in one tax year can have more money added to it in the next tax year?
If so, I can't believe that I had so misundertsood all this all these years!

Yes, that's correct; the annual allowance is the amount that you can add to your ISA(s) during each tax year.

This means that over a period of several years, you can build up quite a hefty ISA balance.

Interest and transfers do not count towards your allowance.

Funkyfreddy

catslovelycats wrote: »

This is so much more complex than I ever thought. So does this mean that £5100 isn't the maximum balance on a cash ISA?

Correct - there is no "Maximum" allowance other than the maximum that can have been added each year.

If you had a Cash ISA's since the 2000/2001 tax year and deposited the the maximum allowed each tax year as below you would have a balance of £26,700 plus accrued interest (somebody will correct me if I have the Cash ISA alowances wrong)...

2000/2001: £3,000
2001/2002: £3,000
2002/2003: £3,000
2003/2004: £3,000
2004/2005: £3,000
2006/2007: £3,000
2008/2009: £3,600
2010/2011: £5,100

This could be in one ISA or any number - the only stipulation is that you can only fund one Cash ISA in a tax year so you could split your allowance betweeen 2 or more existing ISA's.

Prior to the Cash ISA there were TESSA's going back to the early 1990's - these became Cash ISA so some people could have quite a bit more than that.

catslovelycats wrote: »

I know it's the annual permitted allowance, but does it mean that an ISA with a £5100 balance in one tax year can have more money added to it in the next tax year?
If so, I can't believe that I had so misundertsood all this all these years!

Yes - but as many ISA's have an introductory or fixed rate lasting 12 or more months you have to look at moving (transferring) them to get the best rates.

FF

System

The remaining final complication is that sometimes new offers are only open for a month or so. This means that even though legally you could pay in more, eg in the following tax year, it does not necessarily mean it is still open. You need to check the specific rules.