newbie to ISAs

stmatt

Hi

I've been living overseas for the past few years and cannot remember all the rules about ISAs. I opened an Santander ISA in March 2011 and placed £5000 in to use up last years tax year. For this tax year I want to put aside a bit of money every month but may need access to it. What should I do? Do I continue to top up last years ISA or do I open a new ISA for this year.

Baldur

stmatt wrote: »

Hi

I've been living overseas for the past few years and cannot remember all the rules about ISAs. I opened an Santander ISA in March 2011 and placed £5000 in to use up last years tax year. For this tax year I want to put aside a bit of money every month but may need access to it. What should I do? Do I continue to top up last years ISA or do I open a new ISA for this year.

You can do either but remember that the Santander ISA interest rate will drop 12 months from the opening date, when the bonus ceases.

stmatt

So would it be more advantageous to pay into it this year and then transfer it immediately at the start of the next tax year - I should get almost the full year at high rate, or would you just open a new one now.

If I open a new one can I then transfer 2 different ISAs in the next tax year.

Baldur

stmatt wrote: »

So would it be more advantageous to pay into it this year and then transfer it immediately at the start of the next tax year - I should get almost the full year at high rate, or would you just open a new one now.

If I open a new one can I then transfer 2 different ISAs in the next tax year.

The tax year is irrelevant as far as ISA transfers are concerned, when the rate drops on the current Santander Cash ISA (next March?), you can select a new provider and complete their transfer form straight away - they'll arrange the transfer.

The only time that you have to consider current tax year's funds in an ISA is, when transferring, they have to be transferred whole, whereas previous tax year's/years' funds can be partially transferred.

Whether you put all of your funds into one ISA account or open a separate one for your 2011/12 allowance is entirely up to you.

stmatt

Thanks for this info. It helps a lot.

grizzly1911

As baldur has said really.


Remember the existing ISA provider must handle any transfers direct with the new provider. Don't take the money out yourself to do it.

The Santander one is quite flexible. Just remember you can only put money in up to the annual limit. If you take money out you can't replace it that year (same for any provider)