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Messed up with multiple ISAs...

edited 11 July at 8:42PM in ISAs & Tax-free Savings
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london.cidadelondon.cidade Forumite
124 posts
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edited 11 July at 8:42PM in ISAs & Tax-free Savings
1) I had a cash ISA with a bank for the 2018-2019 tax year. I  have topped up some money to the account by utilizing this tax year`s allowance. is it still an ISA account? or now a saving account which is non-ISA? am I expected to transfer it every year to a new ISA account?
2) current portfolio:
- Bank A - Cash Isa --> 20k (for 2018-29)  -- 3k (for 2020-21)
- Bank B - Fixed-rate cash ISA --> 2k for (2020-21)
- Bank C - S&S ISA --> 20K (for 2019-20) -- 3k (for 2020-21)
apologies for the dumb question, am I doing right from regulation point of you? ...
3) not sure about the limitations, as far as I am aware we are allowed to have max two ISA account per year. one for cash ISA and the other one for S&S ISA with the total amount of 20k. Can I have more than two ISA accounts provided that they don't belong to the same tax year? many thanks

Replies

  • eskbankereskbanker Forumite
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    1) I had a cash ISA with a bank for the 2018-2019 tax year. I  have topped up some money to the account by utilizing this tax year`s allowance. is it still an ISA account? or now a saving account which is non-ISA? am I expected to transfer it every year to a new ISA account?
    It's still an ISA and no, you don't need to transfer it every year, you can contribute to the same account across multiple years, as long as you abide by all the other scheme rules, which leads on to....

    2) current portfolio:
    - Bank A - Cash Isa --> 20k (for 2018-29)  -- 3k (for 2020-21)
    - Bank B - Fixed-rate cash ISA --> 2k for (2020-21)
    - Bank C - S&S ISA --> 20K (for 2019-20) -- 3k (for 2020-21)
    apologies for the dumb question, am I doing right from regulation point of you? ... 
    No, you can't pay into cash ISAs with both bank A and bank B in the same tax year, because of the rule explained below.

    3) not sure about the limitations, as far as I am aware we are allowed to have max two ISA account per year. one for cash ISA and the other one for S&S ISA with the total amount of 20k. Can I have more than two ISA accounts provided that they don't belong to the same tax year? many thanks
    ISAs themselves don't 'belong' to tax years as such, but a distinction is made between current year and prior year money - the primary ISA rule is nothing to do with how many you 'have', but instead mandates that you can only pay new money into one ISA of each type in any tax year.
  • masonicmasonic Forumite
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    - Bank A - Cash Isa --> <snip> -- 3k (for 2020-21)
    - Bank B - Fixed-rate cash ISA --> 2k for (2020-21)
    One of these two cash ISAs is invalid. The valid ISA will be the one you paid into first during this tax year.
  • edited 12 July at 3:33PM
    london.cidadelondon.cidade Forumite
    124 posts
    Fourth Anniversary 10 Posts
    edited 12 July at 3:33PM
    masonic said:
    - Bank A - Cash Isa --> <snip> -- 3k (for 2020-21)
    - Bank B - Fixed-rate cash ISA --> 2k for (2020-21)
    One of these two cash ISAs is invalid. The valid ISA will be the one you paid into first during this tax year.
    but the second one is the one I paid first during tax year. ( it is a fixed cash isa doesn't allow to top up) 
    "Please be aware that you cannot pay into a Fixed Rate product as you can only pay into these once, on product opening."
    what should I do now? won`t I be eligible to utilise 20k allowance for this year?
    - what happens if I close "Bank B - Fixed-rate cash ISA " right now , would I be eligible to continue to contribute Bank A for 2020-21? thank you!

  • edited 12 July at 3:47PM
    london.cidadelondon.cidade Forumite
    124 posts
    Fourth Anniversary 10 Posts
    edited 12 July at 3:47PM
    Given that my depostio is 2k for fixed rate cash ISA. I guess i have lost the rest of cash ISA allowance for this tax year. 2020-21
    technically I can invest to s&s ISA 18 k 2020-21, cant I?
    but what will happen to 3k that I invested with BANK A cash ISA 2020-21? will entire 23k lose its ISA status or only 3k? can I now take that 3k out and top up onto S&S ISA?

  • edited 12 July at 6:34PM
    masonicmasonic Forumite
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    edited 12 July at 6:34PM
    masonic said:
    - Bank A - Cash Isa --> <snip> -- 3k (for 2020-21)
    - Bank B - Fixed-rate cash ISA --> 2k for (2020-21)
    One of these two cash ISAs is invalid. The valid ISA will be the one you paid into first during this tax year.
    but the second one is the one I paid first during tax year. ( it is a fixed cash isa doesn't allow to top up) 
    "Please be aware that you cannot pay into a Fixed Rate product as you can only pay into these once, on product opening."
    what should I do now? won`t I be eligible to utilise 20k allowance for this year?
    - what happens if I close "Bank B - Fixed-rate cash ISA " right now , would I be eligible to continue to contribute Bank A for 2020-21? thank you!
    Given that my depostio is 2k for fixed rate cash ISA. I guess i have lost the rest of cash ISA allowance for this tax year. 2020-21
    technically I can invest to s&s ISA 18 k 2020-21, cant I?
    but what will happen to 3k that I invested with BANK A cash ISA 2020-21? will entire 23k lose its ISA status or only 3k? can I now take that 3k out and top up onto S&S ISA?
    You could transfer the money you've paid into the cash ISA with Bank A in this tax year (in full) to your S&S ISA with Bank C. The money you subscribed would be treated as being made to the S&S ISA, leaving you with a valid combination of ISAs. You can leave the money paid in during previous tax years where it is.
    If Bank B is a split-ISA provider then you could contribute more to a separate cash ISA with Bank B and it would be reported as a single cash ISA. Or you could transfer this cash ISA in full to one that allows further deposits.
    Nothing you have done has any bearing on the money you've paid into your cash ISA with Bank A in previous tax years.
  • AlbermarleAlbermarle Forumite
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    Are you aware that for a basic rate taxpayer , you can anyway earn up to £1000 in interest per tax year, tax free.
    So for most people , like you, using an ISA for cash savings is largely redundant .
    Non ISA savings accounts normally have a better rate of interest and it means you have no restrictions such as the ISA rules, discussed above.
    An ISA is still the best way for S&S though as it reduces potential paperwork.
  • london.cidadelondon.cidade Forumite
    124 posts
    Fourth Anniversary 10 Posts
    Are you aware that for a basic rate taxpayer , you can anyway earn up to £1000 in interest per tax year, tax free.
    So for most people , like you, using an ISA for cash savings is largely redundant .
    Non ISA savings accounts normally have a better rate of interest and it means you have no restrictions such as the ISA rules, discussed above.
    An ISA is still the best way for S&S though as it reduces potential paperwork.
    I see, by basic tax payer do you mean £37500 annual income? Which is not the case for me, also dont wanna lose annual ISA allowance per year. My ideal approach is 50% to cash isa and the other 50% to s&s isa.thank you
  • masonicmasonic Forumite
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    Are you aware that for a basic rate taxpayer , you can anyway earn up to £1000 in interest per tax year, tax free.
    So for most people , like you, using an ISA for cash savings is largely redundant .
    Non ISA savings accounts normally have a better rate of interest and it means you have no restrictions such as the ISA rules, discussed above.
    An ISA is still the best way for S&S though as it reduces potential paperwork.
    I see, by basic tax payer do you mean £37500 annual income? Which is not the case for me, also dont wanna lose annual ISA allowance per year. My ideal approach is 50% to cash isa and the other 50% to s&s isa.thank you
    FWIW, a basic rate taxpayer has annual income between £12,500 and £50,000.
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