ISA transfer in middle of tax year

Handlesinc

Hi,

I've read various threads but i'm still confused over a couple of points.

I have about 6k in a cash ISA that's now earning ~zero interest so i want to transfer to a new one. Trouble is i've already added 100 quid in this (2011/12) tax year. So here are my questions...

1. If i open a new ISA which accepts transfers but has a 'minimum balance', does the transfer count towards this value? If not then what do i do because presumably i can't put any new money in as i've already paid into my old ISA this year?

2. If i transfer the full balance of my old ISA (including the £100 paid already this tax year) to a new one but with no new money added, can i continue paying into the old one (i know i shouldn't want to pay into the old one given the interest rate but it may be convenient for a small amount, especially if i am prohibited from paying new money into the new ISA).

3. Finally a more general question (but relates to previous). Martin's guide says you can only put new money into new ISAs once per tax year. Does that mean you can add new money to muliple old ISAs in any given year? (I don't have multiple old ISAs by the way, but i'm curious!)

All help much appreciated!:)

McKneff

If its all in one place and in the same account, its all counted as one ISA, so if you put £1k in each year for 6 years
you have one ISA worth £6k iyswim. (you dont have 6 Isas)

You can move ISAs at any time as long as the ISA provider allows transfers in. The new provider must do the transfer in for you otherwise you lose your tax free status, you then just keep paying in to that one to the annual limit

Hope that helps.

anamenottaken

Handlesinc wrote: »

Hi,

3. Finally a more general question (but relates to previous). Martin's guide says you can only put new money into new ISAs once per tax year. Does that mean you can add new money to muliple old ISAs in any given year? (I don't have multiple old ISAs by the way, but i'm curious!)

Does it really say that?

In fact you can put new money into a single new ISA as often as you want (subject to that particular account accepting multiple payments) up to the maximum limit (£5340 this year).

What you can't do is replace money in a new year's ISA if you make a withdrawal. For example,
open with £1000
add four more lots of £1000 - balance £5000
withdraw £1000 - balance £4000
but you can only add up to £340 - balance £4340
though the ISA limit is £5340 (because you have added a total of £5340 though the balance is only £4340)

If you add any new (not transfers) to an "old" ISA, that is then a subscription to the current year element of it and therefore becomes subject to the rules for new ISAs.

PS No, you can't add new money to multiple "old" ISAs. You can add to one in any tax year, thus making it your current year ISA.

anamenottaken

McKneff wrote: »

You can move ISAs at any time as long as the ISA provider allows transfers in.

Are you sure that you can move a current year ISA to a new provider and make additional subscriptions (up to the limit)?

Lokolo

anamenottaken wrote: »

Are you sure that you can move a current year ISA to a new provider and make additional subscriptions (up to the limit)?

Yes you can

Handlesinc

Thanks. I should've been a bit clearer on one point: i realise you can make multiple payments into a single new ISA duirng the year (bad question phrasing on my part) but i wasn't sure about paying into old ISAs as well as new if the total stays below the limit (now i realise you can't do that). My original specific questions #1 & #2 are still a mystery to me though...

Baldur

Handlesinc wrote: »

Thanks. I should've been a bit clearer on one point: i realise you can make multiple payments into a single new ISA duirng the year (bad question phrasing on my part) but i wasn't sure about paying into old ISAs as well as new if the total stays below the limit (now i realise you can't do that). My original specific questions #1 & #2 are still a mystery to me though...

You are confusing yourself by referring to 'old' & 'new' ISAs.

You have one ISA containing current & previous tax year's/years' subscriptions. Transferring it to a new provider doesn't change it into a 'new' ISA, you are merely opening a new account into which the same ISA funds are being transferred.

Where a provider specifies a minimum deposit to open an ISA account (I assume that you are referring to something like Halifax's £1 minimum), of course your transferred funds will exceed £1 and so meet that requirement. You can, after the transfer has completed, continue to subscribe the balance of your 2011/12 allowance to the new account.

As to your question 2 - the old ISA account is closed as part of the ISA process and the full balance is transferred to the new provider. Even if it remained open, you could not pay any new money into it in the current tax year, as you have already subscribed £100 of current tax year's allowance to the ISA which is being transferred.

AirlieBird

These are the rules and it helps to think about it this way then the usual "you can only put money into one ISA a year" that everybody (including HMRC) say. The rule is simply this: All your deposits made in the current tax year must be held together in the same ISA. You can transfer that ISA around as much as you want to but if you wish to make further deposits they must be to the new account so all your current year deposits are held together.

ISA deposits from previous years are irrelevant. You can transfer them around in full or in part and to the same or different accounts as your ISA holding this year's deposits..

Handlesinc

Okay great, that is a much clearer way of explaining it, thanks! It's frustraing that some of the language from bank adverts is highly ambiguous - perhaps deliberately so?!