What to do with a Maturing Fixed Rate ISA! - The banks dont know the rules!!!

HELP - I have a 1yr Fixed Rate ISA that is about to mature.   But my bank doesn't seem to know the rules for ISA Transfers.  I hope others don't have the same problems... and those in this community can provide advice and information to help others.  Please chip in.

I took out a 1yr Fixed Cash ISA in Jan 2022....
...and I also took out another 1yr Fixed Cash ISA in May 2023.
Now the first ISA is about to mature.... but I'm told I can't open a new ISA.

The bank has said that they will convert it to an instant ISA (at 1.6%).  I have asked them to transfer it to a new 1yr fixed ISA, as the rate is better (4.85%) and they have said "no"... it cannot be done as HMRC rules say you cannot open more than one Cash ISA in a year (as I opened and funded one in 2023).

I believe that this is wrong - And that they (the bank) don't know the rules.....
I understand that YOU CAN TRANSFER ANY PREVIOUS YEAR'S ISAs INTO ANOTHER/NEW ISA ACCOUNT as long as the new account accepts transfers in (and you use the ISA transfer process) - as IT DOESN'T COUNT AS OPENING A NEW ISA.

The HMRC rules and other advisers are clear about only having one 'Active' cash ISA per year, and having to keep contributions below the £20k threshold etc... but you CAN transfer previous years ISAs to another provider or another product (ie on maturity) as the transfer to a new product doesn't count as 'Opening a new ISA' as it's not active and you are not contributing funds (ie paying in any new money).

QUESTION - Do you agree?

EVIDENCE - can anyone post any links, advice or evidence that supports the above?

ASK - Please can someone at MSE pick this tread up and promote/clarify and campaign to have the banks advise ISA savers correctly?  It's important and could save people significant £££.


  • eskbanker
    eskbanker Posts: 29,926
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    Yes, the rule is simple - you can only pay new money into one ISA of each type in any tax year, which is prominently shown at https://www.gov.uk/individual-savings-accounts

    Transfers of prior year money are different, and aren't affected by that rule.

    There is undoubtedly confusion about this, as it's asked most days on this board, and underpaid and underinformed front line bank staff are rarely the source of expertise that you might expect....
  • refluxer
    refluxer Posts: 2,539
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    I guess you either need to talk to someone else at the bank who does know the rules or, after the current fixed rate ISA has matured and defaulted to an Instant ISA, open a new fixed rate ISA online yourself, either with the same bank and request an internal transfer or with a different bank and request an external transfer-in of the Instant ISA. You'd just need to make sure that the new ISA accepts transfers-in.

  • Ocelot
    Ocelot Posts: 490
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    You are correct in your understanding.

    As refluxer suggests, you could wait until it matures then transfer it out, but if you made it clear you only wanted it transferred upon maturity, you shouldn't have to. Indeed, you can even transfer it out (with a penalty) mid-term before maturity if you want to.
  • xylophone
    xylophone Posts: 43,875
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    As refluxer suggests, you could wait until it matures then transfer it out, but if you made it clear you only wanted it transferred upon maturity, you shouldn't have to.

    Indeed you shouldn't! BUT.......


  • soulsaver
    soulsaver Posts: 5,787
    Name Dropper First Anniversary First Post
    edited 23 December 2023 at 12:21AM
    Is this two different institutions?

    YOU can't transfer between ISA providers, the receiving provider makes the transfer at your request, but...

    You appear to be talking to the releasing provider. 

    Apply for a new cash ISA online and follow the process to transfer a fixed cash ISA at maturity... even if it is the same provider... Should be no need to talk to ill informed CS, but you may (or may not) need to download a form for a wet signature..

  • I think a lot of the confusion stems from how different people understand the act of "opening" an ISA.  It's clear that not everybody thinks it means the same thing.  Because the meaning is ambiguous, questions about opening an ISA can only be answered if you explain exactly what it is you want to do.

    In this instance the OP does this, so we can say that they are right and the person at the bank is wrong.  But maybe the question when posed at the bank was less clear?  
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