Advice on ISA's please

threeamigos

Hi,

I would appreciate some advice on ISA’s please. I have an M&S ISA since 2004, whose % rate is reducing to 0.10% on May 5th. I opened an ISA with Cynergy in this tax year 2020-2021 with a much higher rate and I was wondering as the M&S rate is so low can I open another ISA with Aldermore and ask them to transfer my M&S ISA over.

Is this possible and would I loose my tax allowance?

Thanks in advance.

Alexland

You are OK to open another Cash ISA in order to perform a transfer of previous year contributions and any interest provided you make no contribution of new money into the account. The rule is that you can only contribute new money into one ISA of each type each tax year. You can operate and move as many as you like.

threeamigos

Thanks Alexland, I appreciate your advice. If the total amount including interest is over £20,000, say £20,400, can I still transfer the full amount over as it is over £20,000?

colsten

Yes, absolutely you can.

The £20,000 is you annual allowance for new money you deposit in a given tax year. A transfer, executed correctly (i.e. by the new provider, in your case Aldermore), is not new money that you deposit.

threeamigos

Thanks, so I can ask them to transfer the full £20,400 which includes £400 tax earned from the previous year?

Alexland

Yes interest and transfers of previous tax year contributions don't count as a contribution of new money into the account.

threeamigos

Thanks Alexland.

threeamigos

I transferred my previous ISA (old money) and I also opened an ISA for this year, but as it is a variable rate which is due to reduce I have found another ISA with a higher fixed rate. Is it possible to apply for this ISA and transfer the funds over without any penalties? Thanks.

Alexland

Yes you would just ask the new provider to transfer in the current tax year ISA and then continue contributing.

threeamigos

Thanks Alexland.

threeamigos

Are there any limits on how many times one can transfer an ISA during a year if a higher interest rate is available? Thanks