Isa due to mature but I have another Isa. Is this breaching ISA rules?

thisisit22

My fixed  cash ISA for 1 year was for the tax year 2022-23 and is due to mature very soon.  The provider has written to me to advise it will automatically be converted to a instant cash ISA on maturity.

I have another cash Isa 1 year fixed for tax year April 2023 with another provider at maximum  annual amount. 

Will my Isa maturing and being converted to an instant cash isa breach the rules as I have already used my isa allowance and opened the isa this year? I've tried contacting the provider for clarity but they don't seem to know.

I'm not sure if it counts as an isa for the same tax year since it's transferring on maturity by default, so I'm not technically paying into it this year, as it's last year's allowance.

masonic

Which ISA rule do you think this would break? Perhaps if you state it, we can disabuse you of it.

thisisit22

Well then I'll have 2 cash isa's for this tax year(if the 2022/23 Natwest matured one being converted into an instant cash isa in Jan 2024 counts as being in the April 2023 tax year.) I already have a HSBC Isa for April 2023 tax year, so I thought you couldn't have 2 cash ISA's same tax year.

RAS

You can't open a new cash ISA in the same tax year, an existing one that reverts to a cash ISA is not a problem.

What are the rates on the two ISAs? Does the provider whose fix is reverting offer a better rate ISA? If so, you may be able to transfer the reverted one to that. Otherwise, check if your new provider allows transfers in? Then transfer the reverted ISA into the new account. Just one form to complete.

masonic

thisisit22 said:

Well then I'll have 2 cash isa's for this tax year(if the 2022/23 Natwest matured one being converted into an instant cash isa in Jan 2024 counts as being in the April 2023 tax year.) I already have a HSBC Isa for April 2023 tax year, so I thought you couldn't have 2 cash ISA's same tax year.

If the contents of a previous year ISA is transferred to a different ISA by the provider, it doesn't use your current year allowance, so you will not have two 2023/24 cash ISAs.

thisisit22

Thanks for clarifying. It's hard to find this information specified clearly anywhere.

t0rt0ise

Just to be clear.. you can transfer any ISA to any provider and it doesn't count. You can open any number of new ISAs to transfer an ISA into and it doesn't count. The only thing that matters is paying new money in.

Albermarle

thisisit22 said:

Thanks for clarifying. It's hard to find this information specified clearly anywhere.

If you read through the forum you will see similar questions and clarifications are regularly posted.

Albermarle

RAS said:

You can't open a new cash ISA in the same tax year, an existing one that reverts to a cash ISA is not a problem.

What are the rates on the two ISAs? Does the provider whose fix is reverting offer a better rate ISA? If so, you may be able to transfer the reverted one to that. Otherwise, check if your new provider allows transfers in? Then transfer the reverted ISA into the new account. Just one form to complete.

You can open as many as you like, but you can only add new money to one. However this rule is changing on April 5th/6th.