ISA / NS&I / Non-Flexible / Tax years - help requested

JShirt

Hello.  I opened an ISA with Coventry BS in ~July 2019 (monthly interest) and topped it up with the full allowance (my house deposit).  Now many of the rates have been reduced, I am looking elsewhere, and NS&I seem to offer the most suitable easy-access option for me, however they stipulate i cannot transfer in from another ISA.  Presumably this means I can only transfer from my Coventry BS account if i first go through an intermediary account (say my current account)?  Secondly, as it is now June, does that have an impact on my ISA status?  I opened the original ISA in the 2019/20 Tax Year but it has run through to Yr 2020/21, and NS&I's advice says if i 'have invested or plan to invest in a cash ISA from another provider this tax year' then the account is not for me... does that mean i can't open the account?
Any help gratefully received..
J

eskbanker

You would be allowed to withdraw £20K from your Coventry ISA and then, after going via your current account, pay it into the NS&I one.  This has the effect of immediately using up all of your 2020/21 ISA allowance but if you wouldn't be planning to add to this then it might be a viable option for you.

The wording you refer to prevents you from paying new money into more than one cash ISA in a given tax year, but that doesn't relate to your circumstances.

JShirt

eskbanker - thanks very much for your help.  One further question - is the money that is in my Coventry ISA tax free this year as well as in the last year?  If I paid a separate amount into NS&I but left the original 20k in Coventry would they both be tax free or would only the NS&I one be?  Thanks again, J

eskbanker

Yes, once money is within the ISA wrapper it's tax-free until it's taken out again.  If you had money in ISAs with both NS&I (current year) and Coventry (prior year) then it would all be tax-free.

badger09

@JShirt
Do you actually need to have your savings in a Cash ISA? Assuming you are a basic rate taxpayer, you can earn up to £1k interest without paying tax on it. At current interest rates, you'd need substantial cash savings to generate that much, so look at non ISA easy access accounts instead.

JShirt

@eskbanker and @badger09 thank you so much for your advice and help - it's much appreciated. J