Have I got this right?

SueC_2

I'm now in my second year of having a scraping of savings. Well done me.

Last year I put about £2k into a Halifax ISA that was the best buy at the time, but has now plummeted to 0.5%. So, time to transfer.

It is likely that I will have further money to invest this year, although again, we're not talking fortunes!

Am I understanding it correctly that if I transfer last year's £2k into the same ISA that I use to put additional funds into, then it counts towards this year's tax-free allowance, but if I transfer last year's £2k into one ISA, and open another one for new deposits, then I get the whole of this year's allowance for this year's deposits?

So, in effect, method one gives me £5640 tax-free savings, but method two gives me £5640 + £2000 tax-free savings?

Probably entirely academic, as I'm unlikely to reach the £5640 with or without last year's £2k, but it's nice to understand these things!

Thanks all.

bossymoo

If you use a proper ISA transfer service, rather than just opening and doing the transfer yourself, the deposit dates will be carried forward too, so the £2k from a previous tax year would still be classed as previous tax year. You can only pay new deposits into one cash isa in any given tax year.

If you have already been paying into one this tax year, you can't just open another. You would need to transfer both together. If you are happy with your current provider, why not call them to ask if they will accept a transfer from a previous tax year?

SueC_2

I haven't yet paid anything in during this tax year.

My only provider is the Halifax from last year, whose rate has now dropped to 0.5%.

To be perfectly clear:

July 2011 - opened Halifax ISA
August 2011 - deposited approx. £2k
April 2012 - received interest
July 2012 - received interest (bonus payment)

Do I:

a/ Open one ISA, transfer in last year's £2k and then add to it between now and April.

b/ Transfer the £2k into an ISA with a better rate, but then open another, completely separate, ISA to put further deposits into between now and April?

jimjames

Method 1 & 2 give you exactly the same savings.

The only method that would give you less if if you go to the bank, close the ISA and pay it into the new one. Transferring it will always preserve your allowances.

For your second question it doesn't matter. You may find some good rates that don't allow transfers so it may be better to have them separate.

pinkdalek

Did you know you can change your Halifax ISA to one of their current deals also without affecting your allowance.