ISA FAQ

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FAQ updated below.

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These are the most common questions to ISAs. Regular users may like to point newbies to posts in this thread if it helps answer the question.

This is an index to the ISA FAQ:
I heard the rules are changing soon (in 2008)
How many ISAs can I open?
Can I open a Cash and Stocks & Shares ISA?
Can I open an ISA for my child?
How much can I save a year?
What's the difference between Mini and Maxi ISAs?
I heard the ISA limits are going down in 2006. Is this true?
Does the interest affect how much I can save?

Can I transfer my ISA to a better provider?
Can I transfer my cash to stocks & shares/stocks & shares to cash?

What's the best Cash ISA?

My TOISA's about to mature. What can I do?

Frequently discussed ISAs:
First Direct e-ISA
Alliance & Leicester Direct ISA

Please also read the MSE ISA article

Other useful links:
HMRC Factsheet
Investment Management Association guidance on ISAs PDF version

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How many ISAs can I open?

You can open and save in 1 Mini Cash ISA and 1 Mini Stocks & Shares ISA per year. Alternatively you can save in 1 Maxi ISA per year. You CANNOT save in both a Mini and Maxi ISA in the same year.

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Can I open a Cash and Stocks & Shares ISA?
Yes. You can open 1 Mini Cash ISA and 1 Mini Stocks & Shares ISA per year. You can open 1 Maxi ISA, which can contain both a Cash and Stocks & Shares component per year. You CANNOT save in both a Mini and Maxi ISA in the same year.

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Can I open an ISA for my child?
No. You have to be 16 to open a Cash ISA, and 18 to invest in Stocks & Shares. You cannot open an ISA on behalf of anyone else.

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How much can I save in an ISA?

There are no upper limits to how much you can hold in an ISA. There are limits on how much you can deposit into an ISA in each tax year. These are:
£3,000 in a Mini Cash ISA and
£4,000 in a Stocks & Shares ISA

or

£7,000 in a Maxi ISA, of which no more than £3,000 can be in the Cash component.

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What's the difference between Mini and Maxi ISAs?
There are two parts, or components, to an ISA - cash and stocks & shares. The main difference between Mini and Maxi ISA is that these components are held separately in Mini ISAs, whereas they are contained within the same account in a Maxi ISA.

These means that with a Maxi ISA both components have to be held with the same ISA manager, whereas with Mini ISAs you can hold cash ISA with one manager and your stocks & shares ISA somewhere else.

It also impacts on the amount you can save. In both a Mini and Maxi you can save no more than £3,000 in cash, but for stocks & shares you are limited to £4,000 in a Mini S&S ISA and up to £7,000 in a Maxi ISA.

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I heard the ISA limits are going down in 2006. Is this true?
No. The original limits, which were only intended to be run for the first year of ISAs, will now continue until at least 2009-2010.

Confirmation is in the HMRC Bulletin to ISA managers.

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Does the interest affect how much I can save?
No. The limits are how much money you put into the account. Interest amounts do not count towards this limit.

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Can I transfer my ISA to a better provider?

Yes.

General rule and charges
You are entitled to transfer your ISA at any time to another provider. Your ISA provider may charge a fee, or deduct x days of interest. If your ISA is a CAT standard (to 5 April 2005), or a Stakeholder ISA (from 6 April 2005) you will not be charged a fee to transfer you ISA.

IMPORTANT
To avoid losing some or all of your tax relief, if you want to transfer your ISA you must get your new and old ISA providers to do this for you. Ask your new ISA provider for a transfer form.

Transfering Current Years Subscriptions
If you want to transfer savings you have made during the current tax year, they must be transferred in full. If you transfer this years savings but have not subscribed your full allowance, you can top-up your ISA with your new provider. Transfers do not count as subscriptions.
You must transfer like for like. That is you must transfer a Maxi to another Maxi, or a Mini Cash to another Mini Cash.

Transferring previous years subscriptions
If you want to transfer previous years ISA savings you can transfer part or all of this. You can transfer the funds to different providers if you so wish.
The Mini/Maxi tags are no longer valid in the year after the savings were originally made. This means you can move a Maxi to a Mini or vice versa. However, funds cannot be transferred between types of funds, i.e. Cash must remain as Cash and Stocks & Shares must remain as Stocks & Shares.
TOISAs become Cash ISAs and can be transferred to any Cash ISA.

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What's the best Cash ISA?
These can change all the time. Please see Martin's article on ISA Best buys