Why cant I close my isa?

Diane_h_3

Yesterday I went to close last years isa as I wanted the cash out and was told I couldnt.
I opened a new one last week. The cashier told me I am not allowed to open and close an isa in the same tax year. Is this right?

pressuredrop_2

Depends what ISA you have. What ISA do you have?

opinions4u

Which bank? Which account?

You should be able to close a cash ISA without anybody stopping you (although some may have an interest penalty of sorts). But by doing so you're going to lose the tax free benefit for that tax year going forwards.

You can only fund one cash ISA per tax year. In most cases it would be better to transfer the old cash ISA to a new provider (using the transfer process) rather than closing it down.

Diane_h_3

pressuredrop wrote: »

Depends what ISA you have. What ISA do you have?

I have a cash isa from last year and needed the money, hence the reason for closing. I have had to leave a pound in but would have preferred to just close the account! I also opened a new cash isa with a £1 and the intention of putting money in monthly. Dont understand why I just couldnt close it??
Diane

Diane_h_3

opinions4u wrote: »

Which bank? Which account?

You should be able to close a cash ISA without anybody stopping you (although some may have an interest penalty of sorts). But by doing so you're going to lose the tax free benefit for that tax year going forwards.

You can only fund one cash ISA per tax year. In most cases it would be better to transfer the old cash ISA to a new provider (using the transfer process) rather than closing it down.

last year santander cash isa, this year halifax

opinions4u

Diane_h wrote: »

last year santander cash isa, this year halifax

I would suggest writing to Santander (assuming it was their information) asking for an explanation.

If they don't have a good one then insist on them closing the account as required and £25 compensation for them messing you about.

Paul_Herring

Diane_h wrote: »

Yesterday I went to close last years isa as I wanted the cash out and was told I couldnt.

Unless there are some conditions the bank has put on the ISA (such as it's a fixed term ISA and you can't withdraw until the term completes) there's no HMRC rules preventing this.

I opened a new one last week. The cashier told me I am not allowed to open and close an isa in the same tax year. Is this right?

Previous year's ISA's do not affect the current year's ISA. Closing last tax year's has nothing to do with eligibility for opening one this tax year.

The cashier is either woefully misinformed, lying, or you have in fact opened (and funded) another ISA this year, which is the only way they'd be right.

david78

You can close the Santander account if you want to. The cashier has got it wrong.

He/She may have meant that you won't be eligible to open a new Cash ISA with Santander for 2011/2012 (as they don't want you to have the new, better rate) so have asked you to keep £1 in the old account so you can conveniently just add to the account later on in the year (and earn the lower rate).

But as you are opening a new cash ISA with the Halifax instead then it doesn't matter. Tell them you would like your money and the account closed. If they ask about this year's ISA tell them you are opening one elsewhere if you like, but really its none of their business.

dtsazza

If you're opening a new ISA with Halifax, then you definitely don't want to close the old one. Instead, you should transfer it to your new Halifax account.

If you were to close the account and/or withdraw money, that money has now lost its tax-free status forever; you can't get it back inside an ISA. Transferring it would maintain the ISA status, and still let you add up to £5,340 this tax year in new money.

While the Santander representative was obviously wrong, I think there's a chance that this is what s/he was referring to when claiming that you "can't close an ISA". Replace "can't" with "almost certainly shouldn't" and it's closer to the truth.