Want to transfer old ISA to new ISA with better rate, but I opened an ISA last May

andrewilley

I know you are only able to open a newly funded cash ISA once per tax year. However does this apply to simply closing and moving the whole of an old poor-interest cash ISA over to get better interest?

I have a couple of old fixed-term ISAs earning very little, plus one that was ISA-transferred into a new cash ISA in May 2022 (when an old ISA matured). I have not paid any extra cash into any ISAs during this tax year.

Can I set up a new Virgin Money 4.25% ISA and do full-balance transfers-in from the old ISA accounts, perhaps even from that May 2022 1-year ISA which is only earning 1.76%, before the end of this tax year? I don't intend to add any cash, merely fully close an old account and move it all to an ISA with a better rate.

Andre

35har1old

andrewilley said:

I know you are only able to open a newly funded cash ISA once per tax year. However does this apply to simply closing and moving the whole of an old poor-interest cash ISA over to get better interest?

I have a couple of old fixed-term ISAs earning very little, plus one that was ISA-transferred into a new cash ISA in May 2022 (when an old ISA matured). I have not paid any extra cash into any ISAs during this tax year.

Can I set up a new Virgin Money 4.25% ISA and do full-balance transfers-in from the old ISA accounts, perhaps even from that May 2022 1-year ISA which is only earning 1.76%, before the end of this tax year? I don't intend to add any cash, merely fully close an old account and move it all to an ISA with a better rate.

Andre

Yes you can open the Virgin ISA as long as you have a current account with them

When you go through the application process and you come to the question about funding you answer in your Case is £1 to £20,000 and then you submit a transfer request regarding your current ISA. It will ask you do you want to proceed immediately with transfer accepting any penalties for early closures our wait for maturity but there is only a small window to complete the transfer

If you’ve got a 1 Year Fixed Rate Cash ISA Exclusive • You can pay money into your ISA as soon as it’s opened, right up until 30 days after we stop selling this account. After that you can’t pay in any more money. You can pay as much as you like into your account – up to the annual ISA allowance. We’ll send a text to the mobile number you provided us with in your application to tell you the closing date for adding money to your account. Remember, after that date you can’t add any more money until after the fixed period ends. If we receive any money after this date, we will have to return it to you.

• Bring all your ISAs together in one place with our simple ISA transfer service.

andrewilley

Thanks. And it is definitely not a problem that I have already opened another Cash ISA during the current tax year (May 2022)? That ISA was only used to transfer-in funds from an older matured account, no cash has been added.

I didn't know if doing this would now count as a 'second' account during the 2022-23 tax year, even though it will only be funded by closing other ISAs and transferring in.

Andre

refluxer

Yes, you can transfer ISAs as often as you like because those transfers don't count towards your annual ISA allowance.

If you had paid money into one of them during the current tax year then that money would have to stay together (in order to satisfy the rule that you can only pay new subscriptions into one cash ISA at any one time during the tax year) but if you haven't, then this won't apply.

Make sure you do your sums carefully to ensure that the amount you benefit by transferring out of your fixed rate ISAs to those with a higher rate is higher than the penalty you'll pay for transferring before the maturity date. This is particularly important if you're approaching the end of a longer fix (2 to 5 years) where the penalties are higher (6 to 12 months) and transferring early (even to a much higher rate) may not necessarily be a no-brainer.

refluxer

andrewilley said:

Thanks. And it is definitely not a problem that I have already opened another Cash ISA during the current tax year (May 2022)? That ISA was only used to transfer-in funds from an older matured account, no cash has been added.

I didn't know if doing this would now count as a 'second' account during the 2022-23 tax year, even though it will only be funded by closing other ISAs and transferring in.

Andre

Don't worry - you can open as many cash ISAs as you like during the tax year. One potential obstacle you may come across, however, is that some providers insist on providing a tick box which states that you're only opening one cash ISA this tax year (or words to that effect). This is because, in my experience, many ISA applications seem geared towards paying in new money ('subscriptions') from the current tax year which can cause confusion when you're just doing a transfer (there have been many posts about this in this forum).

Albermarle

Suggest you read through the forum as there are lots of threads/questions on the same topic, and all other ISA issues/questions

andrewilley

Thanks all. Glad to know I can open as many ISAs as I like if I'm only doing fund transfers from older ISAs and not adding new cash. Especially helpful as the total amount once consolidated might tip a bit over the FSCS protection limit, so doing a smaller one with another bank too might be a good idea.

Yes, I'd considered the early-closure penalties (60 and 120 days respectively for several accounts) but the accounts I'm transferring from are pants compared to 4.25% (one is just 1%)  so overall I think I should be better off.

Andre

refluxer

andrewilley said:

Thanks all. Glad to know I can open as many ISAs as I like if I'm only doing fund transfers from older ISAs and not adding new cash. Especially helpful as the total amount once consolidated might tip a bit over the FSCS protection limit, so doing a smaller one with another bank too might be a good idea.

I tend to open a new Cash ISA every year for new subscriptions and keep them separate - when you mostly deal with fixed rate ISAs (as I do) then there are more advantages to doing this than when you combine them, IMO.

For example - you can adopt a 'savings ladder'-type approach which allows you to take out fixed rate ISAs at different times of the year and/or for different durations and take advantage of the best rate at the time, rather than putting all your eggs in one basket. If these are taken out across a range of different providers, then the FSCS limit also becomes much less of an issue and this then allows you to open other savings products with the same bank if you want to.