ISA Confusion

dilan911

Hi All

I currently have an ISA that I opened up this year. It is a Virgin Money Instant access ISA, 2.40% interest rate.

The interest rate was 2.82 at the time of opening but has since fallen to 2.40, so i wanted to switch to a fixed rate ISA, but I wanted to fill this years 5640 allowance in the instant access ISA I currently have and then transfer that money into a different fixed rate ISA and then start filling the instant access ISA again (this way I can get a decent interest rate but can get to my money quickly without a penalty if I need to)

Does anyone have any good suggestions that I have completely missed? Am i right in saying that a person can only open 1 ISA a year? So if I wanted to open a fixed rate ISA, would I have to wait until April?

Any help would be appreciated

Dilan

bottletop

You can open more than one ISA a year if you're transferring funds. You can only pay fresh money into one ISA year.

You could top up your curent ISA to the max and then transfer it. But you couldn't pay in any more money until next April.

Gromitt

You can open as many ISAs as you like as long as you only subscribe (pay new money in) to one ISA per year.

So transfer and then fill, or fill and then transfer. Whichever is better for you.

Number of transfers per year is unlimited.

What you can't do is open a new ISA this year and then pay into an old (previous year) ISA.

Totton

Technically you can have 2 ISA's in the same year, one for cash and one for stocks and shares. http://www.hmrc.gov.uk/isa/faqs.htm#8

So just one cash ISA in any year.

HTH,
Mickey

Gromitt

Totton wrote: »

Technically you can have 2 ISA's in the same year, one for cash and one for stocks and shares. http://www.hmrc.gov.uk/isa/faqs.htm#8

So just one cash ISA in any year

That would be confusing. For example, I opened 4 cash ISAs this year. One I never deposited funds in (decided against it once it was opened), 2 I transferred funds from older ISAs to get better interest, and one I opened and deposited funds.

Milarky

dilan911 wrote: »

Hi All

I currently have an ISA that I opened up this year.

This is significant because being 'this year' limits your options a bit.

The interest rate was 2.82 at the time of opening but has since fallen to 2.40, so I wanted to switch to a fixed rate ISA, but I wanted to fill this years 5640 allowance in the instant access ISA I currently have and then transfer that money into a different fixed rate ISA and then start filling the instant access ISA again (this way I can get a decent interest rate but can get to my money quickly without a penalty if I need to)

You are right to be confused because it's not obvious that you cannot do this.

There is no way to leave an ISA 'open', following a transfer, but with no money in it. You have to transfer the full amount to avoid 'subscribing' to more than a single ISA in any one tax year. If the Virgin Money account was opened before this tax year that wouldn't be a problem - but it wasn't - so you can't have the option you want.

Milarky

An alternative is to wait until the tax year ends - because then the money in the VM account becomes 'last year' so (according to ISA rules) it can be split, leaving £1 (or the minimum balance) and £5640 + interest - min balance available for transfer to a different ISA provider.

(Why not just wait it out until the new tax year anyway?)