ISA question

james_uk

Hi, I decided to move some money about that I inherited, as it was sitting in an account that was basically no interest.

I also had an existing ISA with TSB with £40,000 in, this is a few years old and now only gives about 0.60%

After looking around, I decided to open a 2 year fixed ISA with Kent Reliance, which gives 4.4% and used their online ISA to transfer the money. I did choose to move all the money but when they emailed to say the transfer was complete, only £20,000 was showing and the other £20,000 still in my TSB ISA.

The Kent reliance account does show: Your remaining ISA allowance for current tax year: £20,000.00

So, can i assume i can transfer that other £20,000 to it?

And if so does that mean i'd get interest on £40,000 or just £20,0000 (just 1 tax year)

Because i transferred an old ISA, i have read that is considered still the same ISA, is that correct?

Would i be able to set up another ISA with a different provider?

Because i had additional funds, with my current bank TSB, i also set up a fixed 2 year saver and added some money as well.

I'm just a bit confused on the ISA questions and what is right and wrong?

Any advice would be great.

Regards

James

xylophone

You say that you had an existing ISA with TSB holding £40,000.

This was all contributions pre 6/4/2022?

You decided to transfer the whole to a 2 year fix with TSB.

Did you complete a Kent Reliance ISA transfer form and give this exact instruction?

If so, an error has occurred and you need to take this up with KR.

Or do you mean that you opened a 2 year fix ISA with KR and yourself transferred money from TSB to KR?

james_uk

Ah you know what i have just looked and i had 20k in the tsb isa prior to april this year, but added a further 20k in june this year.

I did specify for KR on their transfer instructions to move 40k but is this why they have only moved 20k?

I have just tried to do a manual transfer of 20k from tsb to KR but it's still not showing yet anyway.

I also opened a TSB 2 year fixed isa which is 4% and moved 20k to that also.

The KR isa, will that probably only give me interest on 20k and not 40k or will it give 40 after the money has transferred?

eskbanker

james_uk said:

I did specify for KR on their transfer instructions to move 40k but is this why they have only moved 20k?

I have just tried to do a manual transfer of 20k from tsb to KR but it's still not showing yet anyway.

I also opened a TSB 2 year fixed isa which is 4% and moved 20k to that also.

What do you mean by a 'manual transfer'?  ISA transfers must be processed via the receiving provider's defined ISA transfer process, and anything else would be regarded as a withdrawal from one and a deposit of new money into the other, which would conflict with paying a different £20K of new money into another ISA....

james_uk

Thats what i have done sorry, didn't mean to confuse you.

So 20k has been transferred already via KR doing it as part of the transfer.

Today i have tried to transfer the other 20k via my tsb account, i transferred the 20k to my current account and then transferred that like you would normally make a payment with your online bank.

eskbanker

james_uk said:

Thats what i have done sorry, didn't mean to confuse you.

So 20k has been transferred already via KR doing it as part of the transfer.

Today i have tried to transfer the other 20k via my tsb account, i transferred the 20k to my current account and then transferred that like you would normally make a payment with your online bank.

If I understand you correctly, you've withdrawn the remaining £20K from your TSB ISA (that originally had £40K in it) to your current account, and have then sent it via Faster Payments to a Kent Reliance ISA?  If so, then that uses up your current year allowance, and you're therefore not entitled to pay another £20K (or indeed anything) into any other ISA during 2022/23....

james_uk

Ah no that sounds like i have made a bit of a mistake then

I forgot to consider that by doing a transfer from my tsb account, that is looked at as my years allowance, i think i was just fixated on the fact it was previously already in my isa.

so now i have made a second isa as well and put £20,000 in, i assume i just won't get any interest on that?

If i'd have used my allowance why would they have allowed me to create another isa and put money in?

jimjames

james_uk said:

so now i have made a second isa as well and put £20,000 in, i assume i just won't get any interest on that?

If i'd have used my allowance why would they have allowed me to create another isa and put money in?

Banks have no idea what other ISAs you have opened elsewhere and previous year's ones don't count against your allowance. It's the same situation if you have different types of ISA and you need to manage yourself to keep to the £20k limit per year.

HMRC will get the info from the different banks at the end of the year and may be in touch if you have used more than your allowance.  I'm not sure why you're thinking you'd get no interest, but HMRC might void the ISA and it would become a taxable savings account.

james_uk

How would i know if thats the case? would i be best just taking the money out of the second account i made and just putting it elsewhere?

isasmurf

 james_uk said:

Ah no that sounds like i have made a bit of a mistake then

I forgot to consider that by doing a transfer from my tsb account, that is looked at as my years allowance, i think i was just fixated on the fact it was previously already in my isa.

so now i have made a second isa as well and put £20,000 in, i assume i just won't get any interest on that?

There are a couple of reasons that you may be okay.

Firstly, the TSB cash ISA saver appears to be a 'flexible' ISA. With a flexible ISA when you withdraw money you've put in to the ISA in the current tax year, it is as if you never made that deposit in the first place and you get that back on your allowance. So that you withdrew the entire amount of this year's deposit, means you effectively have your full allowance to use in the same or another ISA.

Secondly, ISA transfers should be made through your ISA providers and not done yourself. However, as this was a common error in the early life of ISAs a concession was introduced whereby if you withdraw all the current year deposits from an ISA before placing them in a different ISA, then the 1st time you do this it will be overlooked.

james_uk said:

How would i know if thats the case? would i be best just taking the money out of the second account i made and just putting it elsewhere?

If HMRC determine an error has been made they will be in touch and all that will happen is the interest will be treated as non ISA interest. Do not try to rectify yourself. Taking money out won't change anything as you would still have used your allowance. 

eskbanker

james_uk said:

I also opened a TSB 2 year fixed isa which is 4% and moved 20k to that also.

If you opened this most recent ISA within the past two weeks then you'll still be within the cooling-off period so can just cancel it and it would be treated as if it had never been opened....