Splitting an old ISA without opening 2 new ISAs

harryandedwardsmum

I am trying to work out how to split my cash ISAs so that I don't cross the magical £75k compensation mark with one account (first world problems, eh!).


I currently had for 2015/16 ISA year:
ISA 1 - £74,500
ISA 2 - £15,400


I want to open a new ISA with the full £15,240 then transfer in the whole of ISA 2 and about £20,000 of ISA 1, so I end up with about £50k in one and £54k in the other.


Sounds simple, but I don't see how I transfer what is left in ISA 2 into a new account without opening 2 cash ISAs in one year. Every account I've seen has a minimum opening amount of at least £1. The interest rate if I leave it where it is is dismal. If I transfer it all into a new account I will end up way over the £75,000 compensation limit.


How do I do this? Any help appreciated.

bigadaj

Just open up a new account for this year and request a transfer across of the required sum from the historic large isa, this goes to the new isa provider and they arrange everything.

As you are aware rates in cash isas are poor, so just trying to understand why you have them.

With some effort you could have £50k in current accounts paying 3%+, or more than double this as part of a couple.

Most people would say that sums abive this level would be better ed for long terms returns, which is far easier in an isa as you wouldn't need to worry about dividend tax or capital gains.

This depends on what the money is for of course, it would need to be invested really for five years at least, ten or more ideally, and so if you are using in the next few years then may be better held in cash.

harryandedwardsmum

Thanks for your reply. I have other cash savings and pay 40% tax on earnings including interest above the limit so it's in my interest to keep it away from the tax man. We will be using the money to buy a much larger house in 2 years so I can't invest longer term, we will need every penny to move where we are going!

xylophone

Even after 40% tax (and do you and your spouse both pay 40% tax?), it would be possible to get a better return on some of the cash in the ISAs by using high interest current accounts combined with regular savers.
Don't forget that even as a higher rate tax payer, you still have £500 Personal Savings Allowance - a standard rate taxpayer has £1000 PSA.

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

ISA rates are not brilliant - see above.

On the other hand, in the unfortunate event of your demise, there is the transferable ISA allowance to consider.

https://www.gov.uk/government/publications/isas-transfer-of-benefits-to-surviving-spouse-or-civil-partner-upon-death

harryandedwardsmum

Thanks for your reply.


Yes we both pay 40% tax. We already have a high interest current account (Santander) with the max in it and some fixed interest savings accounts with the remainder.

xylophone

We already have a high interest current account (Santander)

A joint account? Remember that you can also have a sole 123 account each.

You could each have the regular saver.



Then there are other accounts.... three Lloyds Club, (associated regular save) three Nationwide Flexdirect (associated regular saver), three TSB Plus (associated regular saver), four Tesco.........

MarkFromCornwall

harryandedwardsmum wrote: »

Sounds simple, but I don't see how I transfer what is left in ISA 2 into a new account without opening 2 cash ISAs in one year. Every account I've seen has a minimum opening amount of at least £1.

I did similar recently. The new ISA I opened was with M&S and I transferred in a large sum from an existing ISA. Like you I couldn't pay any new money into it because that would mean I'd paid new money into two ISAs this tax year. But it wasn't a problem because M&S were happy to accept that the only money going into the new account was the transfer in, not even £1 of new money. As far as I know, the same is possible with other ISA providers who say they accept transfers in.