can you put money into an old ISA?

j2011

An over 65 retired couple each had an ISA with £2500 in each ISA.

The £2500 from the wife's ISA was paid into the husbands ISA before the end of the tax year then a new ISA was opened in the husbands name transferring in the £5000 plus interest, leaving an ISA in the wife's name with nothing in it.

Can money still be paid into the wife's 2011/2012 ISA in 2012/2013?

Unless there is a drastic change in the couple's circumstances they will never be able to save more than £5000 between them in the next year.

tanith

I was told once I transferred the money from an old ISA it would be closed , there is nothing stopping you opening a new one in the wife's name though.. It may depend on the bank though , asking them would make sense. I was under the impression that you weren't able to transfer one persons ISA into someone else's without losing the tax free status .

Scarpacci

Leaving aside the issue of the transfer between husband and wife, which seems strange and raises a few questions, it doesn't appear like either the husband or the wife have added money to an ISA in this tax year 12/13. Assuming the transfer to the husband's ISA was done correctly (not withdrawing it and paying it into a new account, but using the transfer forms) then that £5,000 would not count as a new contribution for this year.

If that's the case then they are both individually free to add up to £5,640 to a cash ISA - either the one they already have, should the bank allow it, or a new one. The year you opened the ISA doesn't necessarily matter as any new money added to it will count as the 2012/13 ISA subscription. Either way, the wife does not appear to have used her 12/13 ISA subscription, so she is free to add new money to an ISA.

evenasus

tanith wrote: »

I was under the impression that you weren't able to transfer one persons ISA into someone else's without losing the tax free status .

You are correct in thinking that.

I imagine, what the OP meant, was the money from the wife's ISA was drawn out and put into the husband's ISA as new money.
Not transferred.

McKneff

I cant understand why they are chopping and changing and transferring anyway.

They can just operate their own ISAs, Just leave the money in their own names through out the year. There is absolutely no advantage to this.

j2011

I cant understand why they are chopping and changing and transferring anyway.

Better interest rate.

j2011

without losing the tax free status

What tax free status is lost if £2500 is withdrawn from an old ISA and paid into a new one?

j2011

I imagine, what the OP meant, was the money from the wife's ISA was drawn out and put into the husband's ISA as new money.

That is correct.

McKneff

j2011 wrote: »

Better interest rate.

But they could have just opened an account in there own name with the same interest rate and 'transferred' it into it without losing the tax free status.

If they both had sep. accounts ie half each, then when the time comes when one of them leaves this mortal coil, there will be problems if ALL the moeny is in the deceased's ISA.

Just more faff to deal with.

innovate

j2011 wrote: »

What tax free status is lost if £2500 is withdrawn from an old ISA and paid into a new one?

The tax free status of the interest earned by the £2,500.

Scarpacci

j2011 wrote: »

What tax free status is lost if £2500 is withdrawn from an old ISA and paid into a new one?

Effectively none if there they were not both going to fill up their ISA allowances for that year. However, it did mean the husband's ISA allowance for the relevant year was used further by "transferring" the £2500. So £5000 (+ interest) was used up in their combined allowances to save only £2500. Practically speaking though, it doesn't matter if there was not the possibility they both would have filled their ISA allowances for that year.