Cash ISA query

Mayday

To settle an argument between OH and myself, once you have deposited your annual limit into your Cash ISA - that's it, you have to wait until the following April to open another ISA -

OR can you then still pay into the original ISA as it's in a new tax year.

Answers on a postcard please

Twiggy_34

You can use an existing ISA to take advantage of new tax years regardless of whether you met the previous years limit or not. At least that's my understanding of it and I believe it to be correct as it's what I've done for the last few years. The disadvantage of continuing to use the same ISA account is that you usually get a worsening deal on interest. In my case however, I approached my bank and said "Can you offer me something better or I'll take my money elsewhere" so they gave me a 12 month special rate (increasing interest earnings from 80p a month to over £5 a month). It's not as good as other options out there but was a reasonable compromise so I can retain easy access through my existing online banking account.

innovate

Mayday wrote: »

To settle an argument between OH and myself, once you have deposited your annual limit into your Cash ISA - that's it, you have to wait until the following April to open another ISA -

OR can you then still pay into the original ISA as it's in a new tax year.

Answers on a postcard please

You can open as many cash ISAs as you like, any time you like. You can also change provider as often as you like, using the formal ISA transfer process. You can only deposit new money into one cash ISA at any one point in time, and obviously only up to your annual limit.

You don't have to open a new cash ISA each financial year though most people would since the rate of the previous ISA would be pants. The maximum you can deposit in any one tax year is up to your allowance for that tax year. It is irrelevant if you have not used up your allowances for previous years since unused allowances cannot be carried forward.