Can I open another ISA if already using one?

njo86

I opened an ISA a couple of years ago, in the past year I have used it mostly as a regular saver. I am due to get a fairly substantial sum of money in February.
So my question is:
Can I open another ISA if I currently have an "active" one? Obviously I know I wouldn't be allowed to go over the tax free limit so with what I've put in and out in the other could only put £4000ish in but is this allowed?

Thanks in advance,

Lokolo

No it's not. You can only open another ISA with the view to transfer previous ISAs, not to use allowance (when some has already been used)

njo86

Thanks a lot for the info and quick response.

Mikeyorks

If the existing one is at least 2 years old - then it's a poor % rate?

So you can either add the funds to that - then transfer it. Or transfer the existing one now and then add the funds to the new one in Feb?

Incidentally - what you take out of an ISA is irrelevant. It's what you've paid in since 6.4.11 that counts. If you've paid in more than £1,340 - then you need to revisit the arithmetic?

njo86

Hi Mike,

Yes, it's a very poor rate hence me not wanting to use it for the lump sum. I've checked and I've actually only used £120 of it this year. WHich includes every bit which has gone in, it's with Natwest and you can check how much you've used.

If it has nothing in it (which it currently doesn't) can I shut it down and open a new one in February? Sorry if I'm asking stupid questions but the more I read the more baffled I seem to be!

[Deleted User]

Why wait until February? You can shut it down anytime unless there's account conditions attached. Pick one of the MSE's best buys and remember not to withdraw the money or you lose the tax free bit and can't open another this financial year. The institution that you are transferring to needs to process the transfer electronically - the provider you eventually choose should be able to give you the forms.

Mikeyorks

njo86 wrote: »

If it has nothing in it (which it currently doesn't) can I shut it down and open a new one in February?

That's actually a more complex question than you realise?

You've used it this year - so, in theory, you have to transfer it if you want to use an ISA again this tax year. But it's got £zero in it, so it's a bit of a pointless exercise? Even though there will probably be a bit of interest at the closure point.

As far as HMRC are concerned you have closed it by withdrawing all the cash. So the best way to handle it is to formally close it with the provider and extract the interest. Then - in Feb - go elsewhere and open a new ISA. You're using what is termed a 'self transfer' - it's only possible if you've fully closed the previous ISA and it's only something you can do once in a tax year. You can deposit the full £5340 allowance for this year - if you wish.

But you will need to complete the new provider ISA application to the effect you have not contributed to another ISA this year - otherwise you will get nowhere. It's true - because it's considered the current one never existed, as you are effectively transferring it yourself.