ISA transfer question

RobLondon1984

I have £2660 in my AA ISA. The interest is 3.35% which will drop to 1.7% on June 9th 2012.

I have not deposited any money for the tax year 2012/2013. Can I deposit £1000 into my AA ISA from now till June 9th 2012, then transfer £3660 from my AA ISA to Principality ISA on June 10th 2012, and deposit the rest of my ISA allowance of £4640 from June 10th 2012 to April 5th 2013?

I have emailed Principality regarding this, and should get a reply within 2 days. I though I asked on here so I can get a quicker reply.

Thanks

Mikeyorks

Assuming the Principality one accepts transfers in - yes, you can do that.

psychic_teabag

Yes, that's within the ISA rules. However, maybe the Principality ISA won't be around then.

One possible ruse I can think of would be to do a small partial transfer from your current ISA (last year's money) to Principality now, to reserve the rate. (Could just open it, but I assume they'd close it within a few weeks if you don't fund it, and you can't fund both it and the AA ISA.)

RobLondon1984

Mikeyorks wrote: »

Assuming the Principality one accepts transfers in - yes, you can do that.

Principality do accepts transfers in.

I wasn't sure if you could deposit into two different providers in one tax year. I though you could only deposit into one provider in a tax year?

RobLondon1984

psychic_teabag wrote: »

Yes, that's within the ISA rules. However, maybe the Principality ISA won't be around then.

One possible ruse I can think of would be to do a small partial transfer from your current ISA (last year's money) to Principality now, to reserve the rate. (Could just open it, but I assume they'd close it within a few weeks if you don't fund it, and you can't fund both it and the AA ISA.)

I will wait till June 10th, as the Principality ISA rate isn't that attractive. It's 3.1%. I am sure I will get around the 3% mark from another provider even if the Principality ISA won't be around.

psychic_teabag

RobLondon1984 wrote: »

Principality do accepts transfers in.

I wasn't sure if you could deposit into two different providers in one tax year. I though you could only deposit into one provider in a tax year?

You can deposit new money into ("subscribe to") only one ISA per year. But the transfer doesn't count as new money.

RobLondon1984 wrote: »

I will wait till June 10th, as the Principality ISA rate isn't that attractive. It's 3.1%. I am sure I will get around the 3% mark from another provider even if the Principality ISA won't be around.

Fair enough. The transfer wouldn't commit you to using Principality if there is a better account available at the time, just ensures you have the option.

RobLondon1984

psychic_teabag wrote: »

You can deposit new money into ("subscribe to") only one ISA per year. But the transfer doesn't count as new money.

Ain't I depositing into two ISA for the tax year 2012/2013 tho? AA and Principality.

Unless you mean, depositing into Principality means that it's the only one ISA I am depositing new money?

psychic_teabag

Sorry, see what you mean now. When you transfer the current ISA, the "current-ness" moves with it. So until June, the AA is the current / active one, but when you transfer it, the principality one becomes the active one.

I think a more precise rule is that the current year's subscriptions must all stay together. So before June, all the 2012/13 subscriptions are in the AA. When you transfer, you transfer all those subscriptions (since you cannot split them), and now any more you add must go into the new account so they can all stay together. Saying you can only subscribe to one ISA per year is a simplification of that rule. Or equally, I suppose, you might say that when you transfer it, it's still the same ISA.

Mikeyorks

RobLondon1984 wrote: »

Ain't I depositing into two ISA for the tax year 2012/2013 tho? AA and Principality.

No. In real terms it's the same ISA. You've just shifted it between providers via the transfer mechanism that exists to allow exactly that.