Fixed Term Cash ISA maturing soon. What to do?

dougietee

I'm asking for my other half as she has a lot on her plate at the moment, but we're both a bit clueless about ISAs.

She has a one year fixed rate cash ISA with Newcastle Building Society and has been told by the building society that it's about to mature and that "If you take no further action, on maturity your account will automatically transfer into the Maturity Plus Account".

She's worried about whether she'll be penalised in some way if she takes no action, but also worried that there may be some pitfalls around transferring to another ISA.

• If she doesn't have time to find a new ISA and organise a transfer before the current one reaches maturity, becoming a "Maturity Plus Account", is she going to lose out in a big way? Presumably any further interest on the money becomes taxable, but is there any reason she can't just transfer it to an ISA at a later date without losing any benefits?
  
• If she transfers to a new ISA before the start of the new tax year can she put more money in again after April 6th?

Could someone with a bit more knowledge on the subject put me straight?

I've had a quick look at the guides on opening ISAs and I still feel like a numpty

bowlhead99

They have a non-ISA and ISA version of the Maturity+ account, with the same interest rate. The  bank wont withdraw your money from tax-protected ISA status without your explicit agreement because as a general rule, once the money comes out of an ISA it can't go back in again without using up the annual subscription allowance... so if they let your ISA money automatically get dumped into one of their non-ISA accounts it would generate lots of complaints from their customers.

So the version of the Maturity+ account it will go into is still an ISA, it is just a dumping ground for money that has come off matured products where the customer hasn't taken action to move it into another more competitive account. So you can take your time, if you don't mind the interest rate on the Maturity+ account.

As her existing money is all still in an ISA, it won't count as a new subscription if it's transferred to another Newcastle ISA or transferred by another ISA provider to one of their ISAs instead. Either way, both you and she will get another £20k each of annual ISA subscription allowance from 6 April 2020 for the 2020/2021 tax year, regardless of how much ISA balance you have at the moment.

dougietee

Thank you! That's reassuring.