Opening multiple ISAs

spiderplant0

I have sold some shares in a stocks&shares ISA and I want to transfer this into one or more cash ISA. I dont have any cash ISAs at the moment. Can I open multiple cash ISAs in one tax year as long as all the money I add to them is 'old ISA' cash and so doesnt use up this years ISA entitlement? I.e I'm wondering if the restriction is about the number of ISAs you can contribute to each year or the number of ISAs you can open each year.

badger09

spiderplant0 wrote: »

I have sold some shares in a stocks&shares ISA and I want to transfer this into one or more cash ISA. I dont have any cash ISAs at the moment. Can I open multiple cash ISAs in one tax year as long as all the money I add to them is 'old ISA' cash and so doesnt use up this years ISA entitlement? I.e I'm wondering if the restriction is about the number of ISAs you can contribute to each year or the number of ISAs you can open each year.

Yes

[QUOTE
=spiderplant0;discussion/5491125]I have sold some shares in a stocks&shares ISA and I want to transfer this into one or more cash ISA. I dont have any cash ISAs at the moment. Can I open multiple cash ISAs in one tax year as long as all the money I add to them is 'old ISA' cash and so doesnt use up this years ISA entitlement? I.e I'm wondering if the restriction is about the number of ISAs you can contribute to each year or the number of ISAs you can open each year.[/QUOTE]

The restriction is that you can only pay new money into one cash ISA at a time.

feeloubee

So, similarly to the spiderplant0 question, I have already opened a Help to Buy ISA with the Halifax this tax year and have already contributed towards my yearly allowance and will continue to do so. Another old ISA of mine is dropping its interest rate so I want to just transfer that old ISA to a new one without adding any extra money. Judging by the above answer by badger09 it sounds like my opening another new ISA this year for that purpose would be allowable?

badger09

feeloubee wrote: »

So, similarly to the spiderplant0 question, I have already opened a Help to Buy ISA with the Halifax this tax year and have already contributed towards my yearly allowance and will continue to do so. Another old ISA of mine is dropping its interest rate so I want to just transfer that old ISA to a new one without adding any extra money. Judging by the above answer by badger09 it sounds like my opening another new ISA this year for that purpose would be allowable?

Yes it would be allowable.

In fact, if you wanted to open 2 new cash ISAs, say 1 fixed rate for a year and 1 instant access and split your 'old' ISA funds between them, you could do that. As long as you add no new money to either, and use the new providers' transfer process.

However, and before anyone else asks .... are you sure a normal cash ISA is the best home for your savings at the moment?

feeloubee

Thanks for your reply badger09.

Yes, I'd considered putting my old ISA into my current account which has a good interest rate at 5% at the moment but will probably go down. Also, I'm wary of taking the money out of the tax-free wrapper as I'm sure I remember on the MSE TV programme that if you have a large sum of money then it's still a good idea to keep it in an ISA? I would not put my money in a Stocks and Shares ISA as I'm desperately trying to save up for a house deposit in the next few years and can't afford to lose a penny of it.

jimjames

feeloubee wrote: »

Thanks for your reply badger09.

Yes, I'd considered putting my old ISA into my current account which has a good interest rate at 5% at the moment but will probably go down. Also, I'm wary of taking the money out of the tax-free wrapper as I'm sure I remember on the MSE TV programme that if you have a large sum of money then it's still a good idea to keep it in an ISA? I would not put my money in a Stocks and Shares ISA as I'm desperately trying to save up for a house deposit in the next few years and can't afford to lose a penny of it.

Totally agree that S&S ISA is unsuitable for saving for house deposit. Advice on keeping money in an ISA is quite outdated and very dependent on personal circumstances. There is no benefit I can see in accepting a low rate just because it's tax free.

However if you're saving for deposit then long term tax status is irrelevant and it's far better to just get the best rate you can on the money. So if your savings will fit in a few current accounts then that would be the best option to maximise returns. How much are you talking about?

Yes the rate may go down but people have been saying that could happen for the last 4 years. Those that ignored it and just got the best rates have had those returns for the last 4 years and they've not yet dropped.

badger09

feeloubee wrote: »

Thanks for your reply badger09.

Yes, I'd considered putting my old ISA into my current account which has a good interest rate at 5% at the moment but will probably go down. Also, I'm wary of taking the money out of the tax-free wrapper as I'm sure I remember on the MSE TV programme that if you have a large sum of money then it's still a good idea to keep it in an ISA? I would not put my money in a Stocks and Shares ISA as I'm desperately trying to save up for a house deposit in the next few years and can't afford to lose a penny of it.

The advice used to be to avoid withdrawing money from a cash ISA, unless you needed it for a specific purpose - eg house purchase, because of the loss of the tax free status. But that was in the days when the annual amount you could pay into an ISA was low, and cash ISAs were paying decent rates of interest,

However, many things have changed eg:

1)amount you can pay into an ISA each year is now over £15k and will be £20k next year
2)many cash ISAs are now flexible, so if you withdraw you can pay back in (T&Cs etc etc;))
3) basic rate taxpayers can now earn up to £1k interest a year, tax free
4)many current accounts pay interest up to 5%, and regular savers pay up to 6%

So.... it really makes no sense at all to save short term for a house deposit in an ISA, or to leave your savings in one if you intend to spend most of them in the forseeable future


You are absolutely right about a S&S ISA - not a good idea for short term savings.

Approx how much do you have in your cash ISA?

EDIT jimjames typed much faster than I did

feeloubee

Thanks both.

In answer to the question both of you asked, the amount I want to transfer is just over £12,000.

badger09

feeloubee wrote: »

Thanks both.

In answer to the question both of you asked, the amount I want to transfer is just over £12,000.

It depends how much work you're prepared to do;), when you will need the cash, and whether there is just you - or if you're part of a couple.

If the aim is to maximise the interest:

Nationwide Flexdirect - £2500 @ 5% (for a year), and linked regular saver £500 per month.

TSB Classic Plus £2000 @ 5%

Lloyds Club £5000 @ 4%

Tesco £3000 @ 3% - you can have 2 accounts

There are also regular savers at First Direct, HSBC & M&S all paying 6%, but they also need a current account.

Obviously, all of these accounts have T&Cs which you would need to read & abide by - don't just take my word for it;)


A very simple, but less lucrative solution, would be a Santander 123 account 3% but with a £5 pm fee, & a Santander regular saver @5%

Lots more information on the main Savings & Investments and Budgeting & Bank Accounts forum

Have a read around & come back with any questions.

feeloubee

Thanks. Things are a lot clearer in my head about it now. I already have one of those accounts so my course of action will be a lot simpler than I thought at the start of the day!