ISA depositing query

Bill45

My wife has two lapsed cash ISAs (don't ask) with RBS. Last week she went into a branch to get one of them reactivated before the end of the financial year, and has put some cash into it when the reactivation took effect (i.e. before 5th April).

The clerk is also arranging for the money in the other lapsed ISA to be transferred to the now-active one so it won't lose its tax-free status, but that might take a couple of weeks to go through, we were told. The total will not exceed the ISA cash limit.

RBS is only offering 0.5% on this ISA and she wants to open a new one elsewhere and move her whole existing pot into it once the transfer goes through so she can start saving somewhere else with a better rate.

However, it only occurred to us when we got home that she might be stuck with the RBS one for another year as you can't deposit into more than one ISA in any tax year. So, my question is (fnally) - does the transfer in a couple of weeks time from the old lapsed ISA into the reactivated one count as a deposit that will prevent her making deposits into an ISA with another provider?

Hope someone can help.

Bill

xylophone

Your wife has not subscribed to an ISA in this tax year and therefore the (15-16) subscription of £15240 is still available to her.

She can open an ISA for this tax year with her new subscription and then ask the new provider to arrange the transfer - make sure she chooses one that accepts transfers in.

http://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html

jimjames

I think there may be some confusion here.

ISAs don't lapse and lose their tax free status. Once the money is inside an ISA it remains tax free forever.

Transfers don't count against annual limits so you can move to any other provider you want.

There is also no ISA cash limit so transfers have no impact on paying money in. There is an annual limit on the amount you can pay in each year but that allowance restarts every April for the new tax year.

As such you can pay into any ISA for this tax year - but you can only pay into one cash ISA each year with new money.

Bill45

Hi,

Thank you guys, that seems to answer the question.

Bill

Eco_Miser

jimjames wrote: »

As such you can pay into any ISA for this tax year - but you can only pay into one cash ISA each year with new money.

And by one cash ISA is meant the wrapper, which can be transferred, complete with ALL the current year's subscription, to a new ISA manager; so the OP's wife could in any case transfer her ISA, even with current year subscriptions, to a new account, and then add more (subject to the T&Cs of the account).

enthusiasticsaver

Is your wife sure that a cash isa is the best method of saving for her? The rates on most of the instant access ones are abysmal (1.5% at best) and the fixed term ones are not much better.


I have turned my back on cash isas except for the Coventry BS fixed term until 2018 at 2.4%. The rest of my savings are in stocks and shares isas and current accounts. I have put all our instant access savings -£40k in Santander 123 accounts at 3% and with the new rules on everyone who earns less than £15600 getting interest tax free I no longer pay tax on that either She should check out the interest rate rather than instinctively going for an cash isa.