12 month cash ISA after the maturity date

TedHoliday

Hi Everyone, 

Firstly - please accept my sincere apologies for starting a thread (I have looked but can't seem to find the answer elsewhere) and for asking what are likely to be questions most of you would laugh at for being beyond-basic.

Last year, I took out a cash ISA (I've never been in a position to open one before) and deposited £20k with Shawbrook on a 12 month deal. Now this is where my knowledge ceases....

At the 12 month mark, is that investment subject to tax - not for the 12 months of it being an ISA product, but from month 13 onwards.

At the 12 month mark, is that investment still 'active' and whilst the rate might be lower when it's off bonus, am I able to leave it where it sits an continue to enjoy a tax-free status until such a point that I touch it?

If I were to open up a new ISA, would it be more efficient to use the money from the ISA (as it sits at the moment) or use new funds to open a ISA (which I guess would depend on the answer to my first two questions).

If there are any resources that would help me answer 'what to do when your ISA starts to reach a point of maturity' that might be double-helpful! 

Finally - if you take out a 2 year (for example) ISA, is the 20k limit over the life of the product or can you effectively add up to 40k over the two years.

Sorry for being so clueless about a group of products that have been available for over 20 years.

Peace and love,

Ted. 

Farway

TedHoliday said:

Hi Everyone, 

Firstly - please accept my sincere apologies for starting a thread (I have looked but can't seem to find the answer elsewhere) and for asking what are likely to be questions most of you would laugh at for being beyond-basic.

Last year, I took out a cash ISA (I've never been in a position to open one before) and deposited £20k with Shawbrook on a 12 month deal. Now this is where my knowledge ceases....

At the 12 month mark, is that investment subject to tax - not for the 12 months of it being an ISA product, but from month 13 onwards.

No, it is tax free as long as it all stays in the ISA

At the 12 month mark, is that investment still 'active' and whilst the rate might be lower when it's off bonus, am I able to leave it where it sits an continue to enjoy a tax-free status until such a point that I touch it?

Yes, you can jsut leave it, tax free, where it is

If I were to open up a new ISA, would it be more efficient to use the money from the ISA (as it sits at the moment) or use new funds to open a ISA (which I guess would depend on the answer to my first two questions).

No easy answer, sometimes it is easier to open new ISA & tranfer old one but it all depnds on provider.

If there are any resources that would help me answer 'what to do when your ISA starts to reach a point of maturity' that might be double-helpful!

This board?

Finally - if you take out a 2 year (for example) ISA, is the 20k limit over the life of the product or can you effectively add up to 40k over the two years.

It's 20K of new money, excluding interest, per year. Not all ISA will allow top ups anyway so it will depnd on the product

Sorry for being so clueless about a group of products that have been available for over 20 years.

Peace and love,

Ted. 

Answers in Bold

PS, as you seem to be unsure may I remind you not to take your money out of ISA to place into another ISA or you will lose the tax-free status, let your new ISA provider do it

25_Years_On

TedHoliday said:

Last year, I took out a cash ISA (I've never been in a position to open one before) and deposited £20k with Shawbrook on a 12 month deal. Now this is where my knowledge ceases....

At the 12 month mark, is that investment subject to tax - not for the 12 months of it being an ISA product, but from month 13 onwards.

At the 12 month mark, is that investment still 'active' and whilst the rate might be lower when it's off bonus, am I able to leave it where it sits an continue to enjoy a tax-free status until such a point that I touch it?

If I were to open up a new ISA, would it be more efficient to use the money from the ISA (as it sits at the moment) or use new funds to open a ISA (which I guess would depend on the answer to my first two questions).

By way of illustration I had a fixed rate ISA with Barclays that matured recently. Once it matured they added the interest and it converted to a standard Cash ISA with a low interest rate. I could have opened a new fixed rate ISA with Barclays and transferred the money in. Instead I transferred it to a higher paying ISA account with a new provider. As there is a penalty for transferring out of a fixed rate ISA before it matures the transfer request specifically said it should only transfer when the ISA matured. On the day it matured it was transferred to the new provider. I imagine that when it gets close to maturity Shawbrook will give you some maturity options.

TedHoliday

Many thanks to those of you who have replied. My immediate thinking at the moment is to just leave the money where it is after 12 months - subject to the revised rate being dreadful as at the moment, I don't need the cash and then to open a new ISA in the next tax year using money I've saved elsewhere over the last 12 months (I have a 12 month-regular savings account that should mature in April) and with other money I have elsewhere, I can probably find another way to make my savings more tax efficient (although I don't see this as being something I can do every year, my savings don't total 20k every 12 months!) - I think another ISA coupled with the 'bit of fun' that are premium bonds will see me be a lot more tax efficient and by deferring a lot of my salary in to me pension fund, hopefully slightly better placed for the future than I might have been.

As a general point, I have to say a further thank-you to all the other posters on many other threads not just for their content, but the way it's been posted so that those of us who aren't as financially savvy as some are able to read and digest the comments. It's really appreciated. 

Albermarle

 please accept my sincere apologies for starting a thread (I have looked but can't seem to find the answer elsewhere) 

There is a sub forum for ISA questions, where similar questions to yours are asked and answered all the time.
Some time spent scrolling through there could be a useful exercise for you.

ISAs & tax-free savings — MoneySavingExpert Forum