(Probably stupid) ISA question

Mikeymca

Hi everyone,
(This has almost definitely been asked before, so forgive me)

I am a bit of a newbie when it comes to "serious" bank accounts. Here is my situation:

I currently use a Cash ISA as my savings account. I opened it in 2018 and have been using it to save and withdraw since then.

I would like to open a Help to Buy ISA before they stop being offered, so here is my question. I think because I haven't opened an ISA this year I can open a new Help to Buy ISA.... but then I read that you can only pay into 1 ISA per tax year, so because I pay into a cash ISA regularly does this mean I can't open a Help to Buy ISA and will have to miss out?

Thanks in advance

masonic

It depends whether or not your existing ISA is flexible, and whether you have made net contributions this tax year. If the ISA is flexible and you've only replaced money you've withdrawn in this tax year, not added any more, then you would be fine to open and fund a HTB ISA.

If not, you would need to either:
- transfer your cash ISA to a split-ISA provider (Nationwide, Natwest etc) and hold your HTB ISA with the same provider
- find a HTB ISA you could open with zero balance and wait until the next tax year to start contributing to it
- open a HTB ISA with zero balance, then fund it using ISA transfers of previous tax year money from your existing cash ISA (assuming it holds plenty of money paid in during previous tax years - this could also be done with current year money if you've paid less than £1200 into your existing ISA this tax year, the current year money would need to be transferred in full, but would then make the HTB ISA your valid cash ISA for 2019/20)
- if your existing ISA is flexible, withdraw all of the money paid in during this tax year before opening and contributing to the HTB ISA

Mikeymca

Hmm okay, I think that makes sense.

So if my ISA is flexible. On 8th April this year I had 6000 in the account. I currently have 3000. So does this mean I might be okay to open a help to Buy ISA as I haven't "added" money?

masonic

Mikeymca wrote: »

Hmm okay, I think that makes sense.

So if my ISA is flexible. On 8th April this year I had 6000 in the account. I currently have 3000. So does this mean I might be okay to open a help to Buy ISA as I haven't "added" money?

If your ISA is flexible, and you didn't pay more than £3000 into it between 6th April and 8th April, and since 8th April you've withdrawn £3000, then yes you are free to open a HTB ISA.