More than one cash ISA?

Milkingmaid

Last year I consolidated my cash ISAs into a 1 year fixed ISA which matured this month. I have transferred the entire balance into another 1 year fixed ISA. I have not yet paid any additional funds from this year's allowance into it but if I am going to do it, I have to do it within 30 days. The problem is I won't have accumulated my full £20,000 allowance in time (but I will have by April)

I know I can't open more than one cash ISA in a year but if I understand the rules correctly, transfers don't count. So because I have only transferred an old balance into my new 1 year fixed ISA and not topped it up, I could open another cash ISA in the current year and pay this year's allowance into it.

Is my understanding correct?

Any guidance gratefully received!

Berkshire_Beancounter

That's my understanding too - transfers in aren't counted as a new ISA when looking at investing money in a tax year; it's £20,000 of 'new money' that you can invest in a year. Remember it doesn't all have to be in a cash ISA, you could invest in stocks and shares or an innovative finance ISA (e.g. peer to peer lending, Abundance, Lendahand), as long as the total invested isn't more than £20k in the tax year.

I did just look at the ISA page on the government website but it doesn't specifically say this, but I've invested my allowance this year split between in cash, innovative finance and stocks and shares, whilst also transferring fixed rate cash ISAs which had matured.

Reed_Richards

Provided you do not contribute any new money to the 1 year fixed-rate ISA then you can contribute up to £20,000 into another cash ISA. If you put some new money into the 1 year ISA during the 30 days when this is allowed (and assuming your money is then locked-in to the fixed rate ISA for the remainder of the term) then you cannot contribute any more money to a cash ISA this tax year.

soulsaver

If the provider of the fix has other cash ISAs you may be able to fill the fix and still contribute to one of their other cash ISAa. You'll need to ask them.

dafyd

I understand that it is not permissible to “ open “ more than one Cash ISA in any one Tax Year, but as I have a Cash ISA Account with two Providers, opened in previous years, my. intention was was to add to these existing ISA’s, avoiding not "opening new additional ISA's"

In a telephone conversation with one of the Providers to confirm the process to transfer an amount of this year’s entitlement from an Access Account to my ISA Account, I was advised that any addition made to the ISA account would commit me to using any / all of the remaining balance of the full allowance of £20,000 for this ISA with them.

However, any subsequent amount, certainly to achieve the advantages of fully using the allowance entitlement, would significantly exceed the FSCS limi, a situation which this transfer was part of a rearrangement to avoid.

This effectively prevents me from, as I had hoped, efficiently using the remaining balance of the allowance in my existing ISA with the other Provider.

In research on an HMRC ISA Guidance site, I have been unable to find any mention of this specific restriction of not being able to add to existing, separate ISA's. If correct, does it indicate that additions to an ISA can only be made in theTax Year it was opened. Further investment in subsequent years, only by a new ISA / Provider, and then using the full allowance solely with them. I appreciate that there are other ISA types that could be used, but the Cash ISA is most appropriate.

Has anyone experience, or can refer me to information, which would advise me please.
Thanks.

masonic

dafyd wrote: »

I understand that it is not permissible to “ open “ more than one Cash ISA in any one Tax Year, but as I have a Cash ISA Account with two Providers, opened in previous years, my. intention was was to add to these existing ISA’s, avoiding not "opening new additional ISA's"

Your understanding is incorrect. It is permissible to open more than one cash ISA in any one tax year; what is not permissible is to contribute to more than one cash ISA per tax year.

In a telephone conversation with one of the Providers to confirm the process to transfer an amount of this year’s entitlement from an Access Account to my ISA Account, I was advised that any addition made to the ISA account would commit me to using any / all of the remaining balance of the full allowance of £20,000 for this ISA with them.

This is correct, if you are only considering cash ISAs.

However, any subsequent amount, certainly to achieve the advantages of fully using the allowance entitlement, would significantly exceed the FSCS limi, a situation which this transfer was part of a rearrangement to avoid.

This effectively prevents me from, as I had hoped, efficiently using the remaining balance of the allowance in my existing ISA with the other Provider.

There is nothing to stop you from transferring part of your previous year money to the other ISA provider, or to a third ISA provider, providing both providers involved allow partial transfers. Leaving your current year subscriptions with provider A would allow you to continue to use provider A for the rest of your allowance, in the same way that transferring them to provider B would bind you to using provider B for your remaining allowance this tax year.

In research on an HMRC ISA Guidance site, I have been unable to find any mention of this specific restriction of not being able to add to existing, separate ISA's. If correct, does it indicate that additions to an ISA can only be made in theTax Year it was opened. Further investment in subsequent years, only by a new ISA / Provider, and then using the full allowance solely with them. I appreciate that there are other ISA types that could be used, but the Cash ISA is most appropriate.

In HMRC's terms, ISA contributions relating to different tax years are treated as if they were different ISAs. In practice, (most) providers amalgamate ISAs from different tax years into one overall account.

Has anyone experience, or can refer me to information, which would advise me please.
Thanks.

You've mentioned the HMRC ISA Guidance site, which is the best resource for these matters.

Reed_Richards

dafyd wrote: »

I understand that it is not permissible to “ open “ more than one Cash ISA in any one Tax Year,

When Cash ISAs were first introduced it was normal to "open" a new ISA each tax year which then got closed at the end of the tax year so you could not contribute new funds thereafter. But that invited consumers to go elsewhere in the following tax year. So ISA providers blurred the distinction between opening a new ISA and adding money to an old ISA from a previous tax year. A lot of confusion has ensued. But what you really do when you add new money to an old ISA (from a previous tax year) is to "open" a new Cash ISA and you can only do that once per tax year.

eskbanker

dafyd wrote: »

In research on an HMRC ISA Guidance site, I have been unable to find any mention of this specific restriction of not being able to add to existing, separate ISA's.

[...]

Has anyone experience, or can refer me to information, which would advise me please.

I don't know where you've been looking but the very start of the highest level introductory document summarises the essential rule clearly, at https://www.gov.uk/individual-savings-accounts:

There are 4 types of ISA:

• cash ISAs
• stocks and shares ISAs
• innovative finance ISAs
• Lifetime ISAs

You can put money into one of each kind of ISA each tax year.

In other words, it doesn't matter how many cash ISAs you already have, or how many new ones you open, you can only pay into (no more than) one of them in any given tax year.