Confused with cash ISA

ali137

Hi

I have never had a ISA before, please could someone help.

If i opened a cash ISA with £5,640 for 2012/2013.

For 2013/2014 i opened a new cash ISA account that had a better rate and i i transferred my 2012/2013 cash ISA £5640 to the new account. Can i add another £5,640 to the new account to make the total in my new cash isa for 2013/2014 being £11,280 earning x amount of interest??

can this be done every year, so for 2014/2015 i can add another £5,640 to a new cash isa i account i transfer into???

jimjames

You can add up to the ISA limit each tax year so this year it is a maximum of £5,640 in a cash ISA. Next year it will increase by inflation.

Transferring an ISA has no effect on the current year's contributions.

torbrex

What jim said

but

How can you have opened a 2013/14 ISA when that year has not started yet?

innovate

OP is ahead of their time.

2011-12: April 6 2011 to April 5 2012
2012-13: April 6 2012 to April 5 2013
2013-14: April 6 2013 to April 5 2014

and so on

jimjames

torbrex wrote: »

What jim said

but

How can you have opened a 2013/14 ISA when that year has not started yet?

I thought that when I first replied then I noticed the IF in the question and the statement that they had never opened an ISA which made me think it was all a theoretical situation.

thenudeone

The answer to the theoretical question is that you could; and that's exactly what savvy savers have been doing for a long time. It's possible to have over £80k in a single cash ISA through this method.

The only thing wrong with the question is that the balance transferred will be somewhat higher than the original amount invested in each case because interest will be added.

Red_Cat

Also be aware, that in future years, the maximum allowance permitted in a cash ISA is likely to rise, so you should be able to save more year on year.

p00hsticks

One thing to be aware of though is that not all ISAs will allow 'transfers in' (i.e. to transfer money from existing ISAs set up in previous years across) - it's really down to the individual provider. So oyu may find that you have to choose in the second and subsequent years whether you go for the very highest rate for the new year (but not be able to move old money into it, so having you money in two or more separate places) or a lower rate that will enable you to keep a single ISA with multiple years money in it.

ali137

Thank you to everyone who replies, this has cleared things up for.

techno79

Red_Cat wrote: »

Also be aware, that in future years, the maximum allowance permitted in a cash ISA is likely to rise, so you should be able to save more year on year.

Strictly speaking because the maximum limit for a cash ISA each year is only increased by inflation, one could argue that the increase only allows you to save the same amount year on year (in real terms). If the maximum limit was the same (like it was for many years at £3000) then in fact you would be saving less each year as spending power of £3000 decreased with each year.