What to do with a maturing TOISA?

edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
8 replies 1.4K views
br1anstormbr1anstorm Forumite
215 Posts
edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
My wife's TOISA matures soon and should be worth £11k. She wants to keep the money within an ISA "wrapper". Can anyone clarify/confirm a couple of things:

i) can she reinvest the total amount from a maturing TOISA (ie more than the £9k which was the original TESSA limit)?

ii) can she invest in any currently-offered cash ISA, or only in the rollover TOISA offered by her current provider?

iii) alternatively, can she shift the TOISA money on maturity into her stocks and shares (maxi) ISA?

iv) and can she do this in addition to what she is investing in her current-year ISA? She is already putting the maximum £7k into a stocks and shares ISA this year.

[I originally posted this in an old thread started by torbrex with a similar query, but got no response. I did look at the moneyextra site mentioned there by Cannon Fodder. It provided some limited help. But I'd welcome any other thoughts or comments].

br1anstorm

Replies

  • KTFKTF Forumite
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    I can answer a few of the questions:

    i) She can transfer the whole amount into a Cash ISA if she wants.

    ii) Any cash ISA that accepts transfers in.
  • br1anstormbr1anstorm Forumite
    215 Posts
    KTF wrote: »
    I can answer a few of the questions:

    i) She can transfer the whole amount into a Cash ISA if she wants.

    ii) Any cash ISA that accepts transfers in.

    Thanks KTF - this helps clarify the options slightly. One crucial question remaining is... can she transfer this money into a cash ISA as well as investing £7k in a maxi (stocks & shares) ISA in the same year?

    It used to be the case that one could 'roll over' the money from a TESSA into a TOISA in addition to having a current year ISA. This meant, in effect, that one could have a maxi (stocks & shares) ISA, and a cash ISA (of ex-TESSA money) at the same time. Is it still possible to do this, and are there any restrictions on what we can roll the TOISA money over into?

    Since the simplification/merger of PEPs and ISAs and the phasing out of TESSAs/TOISAs, what we'd obviously like to do is keep the maturing TOISA proceeds inside the tax-free "ISA" wrapper. But rather than opening a further TOISA (or a mini-cash ISA) account, we would like to put the matured TOISA money into our current year stocks & shares ISA on top of the £7k of "new money" we are allowed to invest each year. Can we do this?

    br1anstorm
  • isasmurfisasmurf Forumite
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    The 'TESSA only' ISA was a special kind of Cash ISA that let you open a cash ISA for TESSA capital without affecting your other ISA options. At the end of the tax year in which it was opened the 'TESSA only' label was dropped, just like the Mini and Maxi labels are dropped for any new money going into ISAs at the end of the tax year.

    This means that the ISA you originally opened as a TESSA only ISA is in fact a Cash ISA, and as such, normal Cash ISA transfer rules apply. Namely, it can only be transferred to another Cash ISA and it will not affect your other ISA subscription limits.

    From 6th April 2008 you will be able to transfer this money into your Stocks & Shares ISA, but for the next year it will have to be held in a Cash ISA.
  • br1anstormbr1anstorm Forumite
    215 Posts
    isasmurf wrote: »
    The 'TESSA only' ISA was a special kind of Cash ISA that let you open a cash ISA for TESSA capital without affecting your other ISA options. At the end of the tax year in which it was opened the 'TESSA only' label was dropped, just like the Mini and Maxi labels are dropped for any new money going into ISAs at the end of the tax year.

    This means that the ISA you originally opened as a TESSA only ISA is in fact a Cash ISA, and as such, normal Cash ISA transfer rules apply. Namely, it can only be transferred to another Cash ISA and it will not affect your other ISA subscription limits.

    From 6th April 2008 you will be able to transfer this money into your Stocks & Shares ISA, but for the next year it will have to be held in a Cash ISA.

    Thanks, isasmurf, for such a clear explanation. I knew I could rely on the experts in this forum to give me sensible guidance!

    The last para of your comment gives us a useful steer on how to proceed. We'll now look at a suitable cash ISA which will allow us to transfer money in soon from the maturing TOISA, but is flexible enough to allow us to transfer the money out again sometime after 6 April 2008.

    Keep up the good work...

    br1anstorm
  • I'm in the same boat, with a TOISA maturing later this month, and this post has answered most of my questions too.

    Does anyone know if you can open a new ISA to transfer the TOISA funds into? I opened the 8.1% A&L ISA for 06/07 allowance, and then added my 07/08 allowance into the same account, which doesn't accept transfers into it.

    I therefore need to open a new ISA that allows transfers, but with no new money going in, just my transfered TOISA? Is this possible?
  • KTFKTF Forumite
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    Yes you can open a new one and transfer the money over as long as you dont add any new money to it.

    For example I opened one with Abbey and transferred over my old ones from A&L and YBS (when it matures at the end of the month) into it. No new money was added.

    I then opened an egg one and put in new money for this years allowance.
  • eddaedda Forumite
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    This might be stating the obvious, but make sure its a transfer - don't withdraw the money out. ISA rules are different to the old TESSA ones.
  • Rhino666Rhino666 Forumite
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    I have just transferred my maturing toisa to the Kent Reliance building society who not only accepted the whole balance but also assured me that their already good rate that does not have any false incentives will increase with interest rate rises. Obviously todays interest rate rise will be a good test of that :-)
    PLEASE DO NOT STEAL
    The Government will not tolerate competition

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