Isa Basics - New,Old and tranfers of ISA's

theApprentice_2

Hi Everyone,

I am relatively new to the idea of ISA's and have read through the forums but still do not fully understand the concept.My interest at present is primarily in cash ISA's as I am not yet well versed with stocks and shares.

I understand what happens in 1 year,i.e you put your money in (£3000 max for 2007 rising to £3400 for 2008) and earn tax free interest.Where I'm losing it is in the following years and when dealing with transfers.Hypothetically speaking,let's say I put the full subscription (£3000) in the Barclay's tax beater ISA for 2007/2008.In April 2008 I want to put £3400 in whatever the leading ISA at the time is.Now,there is the Barclay's ISA from the previous year (2007/2008) and X ISA from the new year (2008/2009).In 2009 I want to once again put the maximum allowance into a new ISA provided by provider Y.So now there is Barclay's (2007/2008),X(2008/2009) and Y (2009/2010).In 2010 provider Z comes up with a super rate for the 2010/2011 period.Am I correct in thinking if provider Z accepts transfers,I can open up a new ISA and in addition transfer all the previous ISA's from the diffent providers to the one provider?

Also,if all money is withdrawn from an ISA (leaving £1 to keep the account open),on what does the subscriber earn interest since what has been taken out cannot be put back i.e say all the cash from the Barclay's ISA for 2007/2008 was taken out in 2010,what would be the point of keeping the ISA open with £1 after 2010?

Also,I think I understood it well on first reading but am not entirely sure.After
putting the maximum in an ISA,let's take the hypothetical example above (Barclays 2007/2008),does it mean no cash can be added to the account anymore in subsequent years i.e in 2008/2009 and 2009/2010?I guess what I mean is does subscribe mean opening a new ISA in the new tax year but still allowing you to also put money into an ISA opened in the last tax year?

I have really tried to get my head wrapped around it all and any help/explanations/reference materials would be tremendously helpful.

Cheers,

theApprentice

Cemetery

I thought it was £3600 from next year?

Anyhow to answer the questions.

In your first ream of X Y & Z, you are correct that you could open Z in 2010 with the full amount of £3(4)600 or less & transfer into it all of the isa's opened in previous tax years if provider Z accepted transfers.

If you had a Barclays Isa from 2007/8 which you had initially invested the £3000 in then by 2010 when you withdraw it the only reason to leave the £1 is to let it continue earning whatever rate is being offered.

In your final paragraph, if you open an isa in 07/08 say, when you get to 08/09 you have a choice of either adding more into it, OR opening a different ISA (could be with the same provider even). If that new Isa allowed transfers then you could then as above, transfer the old one into the new one. If you chose instead to just add to your existing one as many do, you wouldn't be able to open a different ISA that year other than to transfer into one.

theApprentice_2

Thanks Cemetry.That was helpful.Sorry I may have got the figures for 2008/2009 wrong but anyway it was the principle behind it I was looking for.

Once again,thanks!

theApprentice.