How many ISAs can I pay into each year?

FREEISBETTER

This might seem a really basic question but I'm still confused.

I've a standing order paying into a Santander ISA each month but the savings rate is low.

Being as I've already paid into that ISA for the last three months am I able to open another ISA at a better rate with a different provider and pay a lump sum in to it if I cease the standing order to the Santander ISA?

Torry_Quine

No you can't do that. You can only pay new money into one ISA in a financial year. You can however transfer money from an ISA into a new one but the new provider has to arrange it.

bigfreddiel

you can pay into 2 isa's- a cash and a stocks and shares isa

they can be with different providers

up t0 half your allowance can be in a cash isa, the remainder ina stocks and shares isa

you can transfer a cash isa to a stocks and shares isa but not vice versa

you can transfer a cash isa to another cash isa

you can transfer a stocks and shares isa to another stocks and shares isa - as the stocks or as cash

quite simple really

cheers

fj

oldfella

you can transfer the Santander ISA to another provider, and then carry on paying into the new one

badger09

FREEISBETTER wrote: »

This might seem a really basic question but I'm still confused.

I've a standing order paying into a Santander ISA each month but the savings rate is low.

Being as I've already paid into that ISA for the last three months am I able to open another ISA at a better rate with a different provider and pay a lump sum in to it if I cease the standing order to the Santander ISA?

No you can't

But if you find a cash ISA paying a better rate which allows transfers in, you can ask that new provider to transfer your existing Santander ISA.

Cancel your monthly SO before you arrange the transfer, then when the transfer is complete, you can carry on paying in, up to your limit of £5760

thenudeone

You cannot pay new money into 2 cash ISAs in the same tax year UNLESS you completely close one account before opening the second one.

http://www.hmrc.gov.uk/isa/isa-guidance-notes.pdf
section 12.32

This is a little-known rule - most people think you must do a formal ISA transfer but you don't.

Chjaka

If you're following the letter of the law then you aren't meant to be able to subscribe to two ISA's in the same tax year (without completely closing one as described above). However, I've linked to a couple of articles below where HMRC admit that as long as you don't exceed you ISA allowance for the year they will let it slide and allow you to keep both accounts active.

http://www.thisismoney.co.uk/money/saving/article-1715710/Exposed-Taxmans-Isa-flaw-and-loophole.html

http://www.thisismoney.co.uk/money/saving/article-1680556/Taxman-ignores-multiple-Isa-loophole.html

castle96

explain to me please...
it is said that you shouldnt close an ISA, take the money and open another, because you lose the tax free status,, but surely any interest is added(tax free) to the final maturity figure, you take the money, open another (rather than transferring the same figure)..OK it's new money, but you've had the tax free interest, you open a new ISA (maybe at a better rate than that applicable to a transfer in rate). What is the difference to the end result ? The new money/ISA is legit and is tax free also.

Yes/No ?

planteria

yes, but the new one is in the new tax year

innovate

castle96 wrote: »

explain to me please...
it is said that you shouldnt close an ISA, take the money and open another, because you lose the tax free status,, but surely any interest is added(tax free) to the final maturity figure, you take the money, open another (rather than transferring the same figure)..OK it's new money, but you've had the tax free interest, you open a new ISA (maybe at a better rate than that applicable to a transfer in rate). What is the difference to the end result ? The new money/ISA is legit and is tax free also.

Yes/No ?

You would not close the ISA. You would ask the new provider to transfer your existing ISA. You cannot contribute to a second (or subsequent ISA) in a single tax year as long as your existing one is still open. You can transfer your ISA though, in the current tax year, just as many times as you like, as long as you transfer the current FY's contributions in their entirety.

psychic_teabag

thenudeone wrote: »

You cannot pay new money into 2 cash ISAs in the same tax year UNLESS you completely close one account before opening the second one.

http://www.hmrc.gov.uk/isa/isa-guidance-notes.pdf
section 12.32

This is a little-known rule - most people think you must do a formal ISA transfer but you don't.

But section 12.30 is titled "Investor error - Self transfer", which says to me it's a mistake that's tolerated, rather than a little-known rule. And it doesn't require that the first ISA is closed, merely all the current year's subscriptions are withdrawn.

Plus, to do this, the investor must lie on the declaration of the second ISA they opened, since they have already subscribed to another ISA in the current year. (And in the declaration for the first ISA, they said they would not subscribe to another ISA that year.)

So IMHO it's fair to mention this for people who have already accidentally withdrawn their money from an ISA, perhaps by mistake. I don't think it should be quoted to encourage people to take this shortcut.