Two Cash ISAs in One Tax Year

miss_marple

I've searched for this and found various answers but specifically would like some reassurance if that's ok! The situation is:

• At the beginning of this tax year I had 2 fixed rate ISAs with Kent Reliance (£7k and £10k).
• I closed transferred one (£7k) which was transferred into an easy access Cash ISA with Kent Reliance (to be used as an emergency fund).
• I now want to transfer the second (£10k) ISA to a fixed rate ISA with Barclays at 4.1% (for my savings).
  

Most websites seem to say that you can't open more than one cash ISA in one tax year, but transfers don't count.

I have not paid any new funds into any ISA this year, so am I still okay to open the ISA with Barclays (transferring the second ISA and not paying in any new funds). 

Technically I will have opened 2 cash ISAs if I do this, and don't want to get into trouble! Thanks.

refluxer

You can open as many Cash ISAs as you like but you can only pay 'new money' from the current tax year's £20k allowance into one cash ISA at any one time.

As transfers don't count towards your £20k allowance, then you are free to open a Barclays Cash ISA and do the transfer you mentioned, plus you'll still have the current £20k allowance available to use before the end of the current tax year if you wish. Just be aware that you'll have to pay a penalty if you're transferring before the maturity date of your current fixed rate ISA.

TiVo_Lad

Don't confuse opening with subscribing. You can open as many ISAs as you like but you can only subscribe (i.e. pay new money into) one ISA in any tax year. Once you subscribe to an ISA, you can only pay new money into that ISA in that tax year and if you transfer that ISA, all the new money must transfer; you can't transfer some of your new money.

You say you "closed" the £7K ISA. Did you use the ISA Transfer process or did you withdraw the cash and pay it into the Kent Reliance?

miss_marple

Thank you for the replies, that puts my mind at rest! Yes TiVo_Lad, I have corrected my original post as I meant to say I have transferred it not closed and paid into a new account. No money has been paid into any ISAs this year so your point about understanding the difference between opening and subscribing makes it clearer. 

Thank you!

refluxer

miss_marple said:

Thank you for the replies, that puts my mind at rest! Yes TiVo_Lad, I have corrected my original post as I meant to say I have transferred it not closed and paid into a new account. No money has been paid into any ISAs this year so your point about understanding the difference between opening and subscribing makes it clearer. 

Make sure you specify 'tax year' if that's what you mean - it's just a small point, but an important one when it comes to ISAs

jimjames

As a side note for the sorts of amounts you're looking at it doesn't really matter if you transfer or withdraw the money as you're still within the £20k limit. The time when transfer is essential is if you are looking to have multiple homes for the money and as outlined do need to open more than 1 ISA which is possible if you transfer but not if you DIY.