New ISA but transfers not allowed - what to do?

MissX

Hi guys so my existing ISA from last year has come to and end and the rate has dropped substantially so I'm gonna move the money.

I've seen a new account but it doesn't accept transfers from previous ISAs, what are the implications if I withdraw it and close the account so it's transferred into my bank account?

Any other ways to do it?

Thanks

colsten

It sounds as if you have not made any deposits since April 6 this year? If so: If your existing ISA plus the amount you intend to deposit for 2014-15 is less than £15,000, there is no problem in withdrawing from your old ISA and putting the money into a new ISA. However, you would almost certainly earn a lot more interest in current accounts, anyway, for this sum of money. And you can still put the money into an ISA before the tax year expires.

dollywops

MissX wrote: »

Hi guys so my existing ISA from last year has come to and end and the rate has dropped substantially so I'm gonna move the money.

I've seen a new account but it doesn't accept transfers from previous ISAs, what are the implications if I withdraw it and close the account so it's transferred into my bank account?

Any other ways to do it?

Thanks

If you close the ISA and transfer the money into your bank account, this money will no longer be 'old' money. If you subsequently open a new ISA, you will only have the maximum amount of 'new' money to invest. Is this your intention?

MissX

dollywops wrote: »

If you close the ISA and transfer the money into your bank account, this money will no longer be 'old' money. If you subsequently open a new ISA, you will only have the maximum amount of 'new' money to invest. Is this your intention?

Yeah I don't really need it for an old contribution - I'm happy with old money plus whatever else I can deposit to go towards this years ISA allowance then maybe next year have it as a previous allowance, plus new ISA allowance if that makes sense.

Was just wondering because I always hear it's bad to transfer ISA money yourself of withdraw it coz u will get taxed? I don't understand that part? Thanks for replying :j

dollywops

MissX wrote: »

Yeah I don't really need it for an old contribution - I'm happy with old money plus whatever else I can deposit to go towards this years ISA allowance then maybe next year have it as a previous allowance, plus new ISA allowance if that makes sense.

Was just wondering because I always hear it's bad to transfer ISA money yourself of withdraw it coz u will get taxed? I don't understand that part? Thanks for replying :j

'Yeah I don't really need it for an old contribution - I'm happy with old money plus whatever else I can deposit to go towards this years ISA allowance then maybe next year have it as a previous allowance, plus new ISA allowance if that makes sense.'


No, this does not make any sense to me.


The money you have in your ISA must stay in that ISA, or be transferred to another ISA. If you transfer it to your bank account, that sum of money loses its tax-free status. Any interest subsequently earned outside of the ISA is subject to tax.


I think what you are trying to do is have your ISA money in one pot. If you are going to make a deposit of a lump sum for this year into a new ISA, you should be able to find one which will also accept 'old' money. I am unsure as to whether you will find an ISA which will accept 'transfers-in' and payments as and when. Someone more knowledgeable than me will be able to answer this.

colsten

dollywops wrote: »

The money you have in your ISA must stay in that ISA, or be transferred to another ISA. If you transfer it to your bank account, that sum of money loses its tax-free status.

As I said before, if the total existing ISA plus deposits planned for this year is less than £15,000 (which it appears to be in the OP's case), it does not matter at all if all funds from the old ISA get withdrawn and deposited into a new ISA.

In fact, in this case, a withdrawal & effectively starting again is much cleverer than making a formal ISA transfer since basically all the ISAs that allow transfers in have worse rates than those that only take the 2014-15 allowance.

MissX

colsten wrote: »

As I said before, if the total existing ISA plus deposits planned for this year is less than £15,000 (which it appears to be in the OP's case), it does not matter at all if all funds from the old ISA get withdrawn and deposited into a new ISA.

In fact, in this case, a withdrawal & effectively starting again is much cleverer than making a formal ISA transfer since basically all the ISAs that allow transfers in have worse rates than those that only take the 2014-15 allowance.

Thank you so much and for barring with me without being rude. I don't know why so many people are rude to other people here. We are asking advice with little knowledge from people with more knowledge, no need for attitude! :mad:

But Colsten, thanks :T