ISA rules

GDB87

Hi

I'm a long time MSE follower but first time on the forums. I'm hoping someone can clarify an ISA rule for me. I'm sure this is a really simple question. At least I thought it was but recently I've had a load of conflicting answers...

I understand I can only pay new cash into 1 new cash ISA / year.

I already have some ISA money. What I want to do is open a new cash ISA accepting transfers and transfer my current ISA money into this new ISA paying a better interest rate. I will not pay any new cash into this new ISA, just transfer old ISA money.

In the same tax year I want to open a separate new cash ISA and pay new ISA cash into this one.

Is this within the rules?

Hoping someone can clarify this for me:undecided

Thanks!

Archi_Bald

You can do this but out of interest, why would you want to do it?

GDB87

Thanks Archi

Basically I want to move my cash to an ISA accepting transfers so I can get a better interest rate on all of it. Should another ISA come along which offers a better interest rate but doesn't accept transfers, I want to still have the option to pay this years cash ISA limit into it.

If this doesn't make sense or there is something better I could be doing I am open to suggestions...

badger09

GDB87 wrote: »

Thanks Archi

Basically I want to move my cash to an ISA accepting transfers so I can get a better interest rate on all of it. Should another ISA come along which offers a better interest rate but doesn't accept transfers, I want to still have the option to pay this years cash ISA limit into it.

If this doesn't make sense or there is something better I could be doing I am open to suggestions...

You're still not being very clear :cool:

If you want to move previous years' cash ISA subscriptions to a new cash ISA (A) which accepts transfers in, you can do so. You must use the new ISA provider's transfer process.

If you want to pay new money into that (A), or a totally separate, cash ISA (B), you can do so but you can't pay into both A & B.

If you find a better cash ISA (C) later, you could only pay new money into that, if you also arrange for everything you've paid into either A or B since 6th April 2015.

But what Archi is probably alluding to, is the fact that you can probably achieve much better interest on your savings in various current accounts paying 3% - 5%.

GDB87

I think you have answered my question thanks but for the sake of clarity this is what I believe:

1. I can only pay new ISA cash into one ISA per tax year - does anyone know the reason for this rule?

2. I can transfer old ISA cash around as many times as I like should I want to, so long as I don't pay new ISA cash into any of these ISAs if I have already paid new ISA cash in somewhere else.

If I was to open a new ISA with bank A, pay in 7k, then transfer this to a different ISA with bank B, could I pay them remainder of my ISA allowance into this with bank B? Or is that considered paying into 2 ISAs?

As for better interest rates in current accounts, I have a Santander 123 account close to maxed out. I would have to open many other different current accounts to take advantage of the higher rates if I was going to put all my ISA cash in those as they all seem to pay on just the first £2500. I might look into it but for now I'm fairly happy if I can get 2% tax free in an ISA.

Thanks

The_Only_Homer_Simpson_UK

hi
similar dilemma to OP my wife has a 123 account and maxs that to get the 3% , also last tax year had £15k in Santander 1.6% ( now 1% :-( ) , however they offer 123 account holders 2% customer ISa fixed for 2 years .
So Would she be best moving the 2014/15 ISa ( £15k +) to the 2 year deal as we see no reason to touch it at this time
and then I assume she is eligible to still open another Isa for this 2015/16 tax year to put savings into with another provider eg Skipton where we "may" need access in a years time .....




thanks for any feedback
TOHSUK

badger09

GDB87 wrote: »

I think you have answered my question thanks but for the sake of clarity this is what I believe:

1. I can only pay new ISA cash into one ISA per tax year - does anyone know the reason for this rule?

Because that's what the Government/HMRC rules allow



2. I can transfer old ISA cash around as many times as I like should I want to, so long as I don't pay new ISA cash into any of these ISAs if I have already paid new ISA cash in somewhere else.

If I was to open a new ISA with bank A, pay in 7k, then transfer this to a different ISA with bank B, could I pay them remainder of my ISA allowance into this with bank B? Or is that considered paying into 2 ISAs?


The 1st paragraph is incorrect.
If, in the current tax year 6/4/15 - 5/4/16 you pay £7k into ISA A, then ask ISA B bank to arrange to transfer the full £7k from A, you can then pay the remainder, up to £8240 into B. If ISA B is a fixed term/fixed rate you would typically only be able to pay new money in for a short time.

As for better interest rates in current accounts, I have a Santander 123 account close to maxed out. I would have to open many other different current accounts to take advantage of the higher rates if I was going to put all my ISA cash in those as they all seem to pay on just the first £2500. I might look into it but for now I'm fairly happy if I can get 2% tax free in an ISA.

Thanks

Club Lloyds £5k @ 4%, BoS Vantage £5k @ 3% (can have 3 sole accounts) etc etc

badger09

The_Only_Homer_Simpson_UK wrote: »

hi
similar dilemma to OP my wife has a 123 account and maxs that to get the 3% , also last tax year had £15k in Santander 1.6% ( now 1% :-( ) , however they offer 123 account holders 2% customer ISa fixed for 2 years .
So Would she be best moving the 2014/15 ISa ( £15k +) to the 2 year deal as we see no reason to touch it at this time
and then I assume she is eligible to still open another Isa for this 2015/16 tax year to put savings into with another provider eg Skipton where we "may" need access in a years time .....




thanks for any feedback
TOHSUK

Your wife can move her previous years' ISA wherever she wants - make sure to use the new ISA provider's transfer process. Assuming she hasn't paid anything into a cash ISA since 6th April this year, she can also open a new ISA wherever she wants and pay in up to £15240.

She, you, or you jointly, could also consider making more use of other current accounts paying 3% - 5%

GDB87

Thanks badger

I've found with current accounts in the past that you have to have a certain number of direct debits going into them to get the bonus rate. Have they relaxed these rules or do you need to set up multiple direct debits between all your current accounts to keep hitting the requirements.

I worry that for just 0.2-0.5% extra interest (once factoring in tax that you don't have to pay on an ISA) it isn't worth the grief of setting this all up and managing it, especially when they can 'adjust' the interest rate anytime they like.

badger09

GDB87 wrote: »

Thanks badger

I've found with current accounts in the past that you have to have a certain number of direct debits going into them to get the bonus rate. Have they relaxed these rules or do you need to set up multiple direct debits between all your current accounts to keep hitting the requirements.

I worry that for just 0.2-0.5% extra interest (once factoring in tax that you don't have to pay on an ISA) it isn't worth the grief of setting this all up and managing it, especially when they can 'adjust' the interest rate anytime they like.

Direct debits don't go into accounts, they are payments made out of them, eg council tax, utilities, insurance, mobile phone contracts etc.

Some current accounts do need direct debits to be paid. However, it is very easy to meet those requirements.

Current accounts which pay decent interest usually have minimum monthly funding requirements - is this what you mean by 'set up multiple direct debits between all your current accounts to keep hitting the requirements'? If so, you can easily meet those requirements either by setting up standing orders, or moving the money manually.

I would rather spend around 30 minutes a month (and I have many current accounts), to earn up to 5%, rather than settle for 2%. Obviously, its entirely up to you

Monty_H

badger09 wrote: »

Your wife can move her previous years' ISA wherever she wants - make sure to use the new ISA provider's transfer process. Assuming she hasn't paid anything into a cash ISA since 6th April this year, she can also open a new ISA wherever she wants and pay in up to £15240.

She, you, or you jointly, could also consider making more use of other current accounts paying 3% - 5%

I would like to Open a new Santander 2 year fixed cash ISA to use my 15/16 allowance. I also have a cash ISA from a previous tax year (coincidentally with Santander) I would like to transfer to the same type of account. Can I do this without consolidating both amounts into a single new account. If I need to access money within the fixed rate period I would to access some funds without loosing interest on the full amount. Hope this makes sense!