ISA's

rh22uk

I have a general question about ISA's. I have an ISA that I took out around June time which is 2.85% but most of that is a introductory bonus. When we enter the new tax year in April and I get a new ISA allowance should I move that Old ISA into a new ISA with a better interest rate? I am a bit confused as if I did it in April I would not have had the ISA for a full year yet so am wondering what happens to the interest that hasn't been paid yet if I move?

Hope someone can help.

Lokolo

If you can move it to a better rate then do it now, you don't need to wait. But if it's 2.85% theres not much point as you aren't going to find much better, and your bonus is until June.

When it comes to April 6th you get your new allowance. You can use this to either top up any old ISAs, or open a new one.

If you move an ISA, any interest due, will be paid during the transfer process.

rh22uk

Ok...so I don't think I can open a new ISA now because I have already opened one this tax year. But say in April I open a new ISA that doesn't accept transfers in, when my bonus on my old ISA expires in June that ISA will be left earning practically nothing until next April when I can open another new ISA that does accept transfers in. But this April say I open a new ISA that does accept transfers in, I can put up to £5100 into that ISA then when my bonus expires in June I can transfer that ISA into my new ISA. Am I right in what I'm saying? Basically it seems key to me that my next tax year ISA needs to accept transfers in for the benefit on my current ISA in he future....

Thanks to anyone who can help clarify.

Consumerist

pp87 wrote: »

Basically it seems key to me that my next tax year ISA needs to accept transfers in for the benefit on my current ISA in he future....

When your 2010/11 ISA bonus expires in June you could then transfer it to any ISA manager who accepts transfers. In fact, you can transfer it to a new manager who accepts transfers at any time at all.

From 6 April 2011 you can contribute up to £5,340 (2011/12 allowance) to any new (or existing) ISA you like - you don't need it to accept transfers if you are contributing cash.

I hope I've understood your question correctly.

rh22uk

What your saying makes sense. I understand that I don't need to have an ISA that accepts transfers in if I'm just adding cash. The bit I am still unsure of is, if you can only have one ISA per tax year if that ISA is not an ISA that accpets transfers in, when my current ISA's bonus runs out in June I will be earning a poor rate of interest unless I transfer it in June into a new ISA that I will have already opened in April. If the ISA I open in April doesn't accept transfers in then I will have no where to move my old ISA when its bonus runs out in June.

Is this right?

Consumerist

pp87 wrote: »

. . . when my current ISA's bonus runs out in June I will be earning a poor rate of interest unless I transfer it in June into a new ISA that I will have already opened in April. If the ISA I open in April doesn't accept transfers in then I will have no where to move my old ISA when its bonus runs out in June.
Is this right?

When your current-year ISA (2010/11) bonus runs out in June you don't have to transfer it into the new ISA you have opened since 6 April 2011; you can transfer it to any ISA manager who accepts transfers.

You can have multiple ISAs from previous years held by multiple ISA managers.

If, however, you insist on transferring the 2010/11 ISA to the same ISA you have opened for the 2011/12 tax year then it will need to be an ISA that accepts transfers. But why restrict your options in this way when it is not necessary? In June you can transfer the 2010/11 ISA to any ISA manager who accepts transfers at the best rate available at that time.

spikyone

@Consumerist - I think you're confusing matters slightly. The OP seems to be asking whether opening an ISA and depositing new cash prevents them from transferring an old ISA to one with a better rate. Hopefully I understand that right...?

Anyway my understanding of ISAs is that "opening" an ISA for a particular year means putting new money in it - whether it's an existing ISA or a new one.
Signing up for an ISA with a new provider, which you only use for a transfer in, does not count as opening an ISA. Just remember that you must make the transfer by asking the new provider to do it for you - don't do it yourself!

Lokolo_2

spikyone wrote: »

@Consumerist - I think you're confusing matters slightly. The OP seems to be asking whether opening an ISA and depositing new cash prevents them from transferring an old ISA to one with a better rate. Hopefully I understand that right...?

Anyway my understanding of ISAs is that "opening" an ISA for a particular year means putting new money in it - whether it's an existing ISA or a new one.
Signing up for an ISA with a new provider, which you only use for a transfer in, does not count as opening an ISA. Just remember that you must make the transfer by asking the new provider to do it for you - don't do it yourself!

Correct. :T

Consumerist

spikyone wrote: »

Anyway my understanding of ISAs is that "opening" an ISA for a particular year means putting new money in it - whether it's an existing ISA or a new one.

Whilst what you have said is correct, I understood the question differently. I got the impression that the OP thought it was necessary to transfer the old ISA (2010/11) to combine it with the new (2011/12) ISA. And this is not necessary.

Perhaps, between us, we have clarified the situation for the OP.

rh22uk

I can confirm that between you, you have clarified perfectly.

Thanks for all your comments, much appreciated.