Can I open another (better) cash ISA this tax year?

Tidynige

Hi all, I'm getting contradictory advice so hoping someone can help clear this up.   I opened a Post Office Online ISA 6 months ago in Juy 2023, which is currently paying 4.22%. I see that Leeds Building Society are now offering an online ISA paying 5.05%. I would like to open a Leeds account and transfer in the funds from the Post Office one (which I would then close)  - but am I allowed to do this? Everything I read says you can only open one cash ISA in  each tax year, but the person I spoke to on the phone at the Leeds BS said it's okay if i'm transferring all the funds from the old account the the new one. (PS I've checked the relevant MSE pages and can't get an answer there.)

refluxer

Yes, you can open a new cash ISA and fund it with a transfer from the old one. If you have any of the current tax year's allowance remaining, don't fund the new one with any new subscriptions until after the transfer has completed, in order not to break current ISA rules.

eskbanker

Yes, it's OK to do this, as long as you transfer the first account in its entirety, using Leeds' ISA transfer process.

molerat

You can only fund one ISA with new money so yes you can open another ISA and transfer the old one into it.  The only downside is that there may be penalties for closing the old one, looking at the PO T&Cs there is a 90 day interest penalty

Albermarle

Everything I read says you can only open one cash ISA in  each tax year, 

Well if you had read through this forum  you would have seen the correct answer, as the same question is asked very regularly. It is a good resource for learning about ISA rules.

refluxer

molerat said:

You can only fund one ISA with new money so yes you can open another ISA and transfer the old one into it.  The only downside is that there may be penalties for closing the old one, looking at the PO T&Cs there is a 90 day interest penalty

A penalty will only apply if the OP has money tied up in a fixed rate account, though. I was presuming they were talking about an easy access cash ISA, as the Leeds one they want to transfer to is also easy access.

Tidynige

Thanks to everyone for your replies, I will open the Leeds account tomorrow and get them to do the transfer using the proper process.  Incidentally it's an Easy Access account rather than a fixed rate or notice account, so there shouldn't be any penalty.