ISA Maturity

paulm299

Hi All

I opened up an ISA in March 2023 for the year 2022/2023 and received a letter recently from the bank informing me it is due to mature in about 4 weeks time.  The letter states that the money will be transferred to a new instant ISA unless I instruct them otherwise.

I opened up another ISA with a different bank for 2023/2024 which is due to mature in July 2024 but this ISA has some withdrawal limitations and I don't want to transfer anymore money into this one.

I think I am best waiting until April 2024 to open up a new ISA which does not have such stringent withdrawal limitations and then transferring the ISA which will mature in March 2023 into this one.  However I have some queries I am not sure of and was wondering if anyone could provide some guidance:

(1) I am assuming if the bank transfers my current ISA (which is due to mature in March 2024) to a new instant ISA this does not constitute me opening a new ISA?

(2) How does it work once an ISA matures?  i.e. can I withdraw the interest it has made out of the account and then leave the original remaining total to reinvest?  Does withdrawing the interest it has paid once it has matured incur any charges or impact the tax free allowance for the year?

(3)  Does the above sound ok?  Opening a new ISA in April for the tax year 2024/2025 and transferring the ISA which matures in March 2024 into it?  Would this still allow me to save £20,000 tax free into this account for the new tax year?

Many Thanks

35har1old

paulm299 said:

Hi All

I opened up an ISA in March 2023 for the year 2022/2023 and received a letter recently from the bank informing me it is due to mature in about 4 weeks time.  The letter states that the money will be transferred to a new instant ISA unless I instruct them otherwise.

I opened up another ISA with a different bank for 2023/2024 which is due to mature in July 2024 but this ISA has some withdrawal limitations and I don't want to transfer anymore money into this one.

I think I am best waiting until April 2024 to open up a new ISA which does not have such stringent withdrawal limitations and then transferring the ISA which will mature in March 2023 into this one.  However I have some queries I am not sure of and was wondering if anyone could provide some guidance:

(1) I am assuming if the bank transfers my current ISA (which is due to mature in March 2024) to a new instant ISA this does not constitute me opening a new ISA?

(2) How does it work once an ISA matures?  i.e. can I withdraw the interest it has made out of the account and then leave the original remaining total to reinvest?  Does withdrawing the interest it has paid once it has matured incur any charges or impact the tax free allowance for the year?

(3)  Does the above sound ok?  Opening a new ISA in April for the tax year 2024/2025 and transferring the ISA which matures in March 2024 into it?  Would this still allow me to save £20,000 tax free into this account for the new tax year?⁷

Many Thanks

It's all tax free but you can transfer it to a new ISA once it matures Don't need to wait to April unless you need the interest you don't need to withdraw it.

jondoc

 I cannot find any useful information ( on the Santander website or the Web ) of how to stop my Santander 23/24 Isa (on April 5th 2024 )  from transfering to another 24/25 Santander Isa ( as it did in 22/23 without my knowlege ). I would like to stop/cancel this;  what seems to be an automated transfer;  and close the Isa and pay the proceeds into my Santander Current/Chequing account. Help please.

jondoc

My new Isa does not accept transfers, so I have to cash in the Santander Isa, then pay it into my new Isa on April 6th.

jondoc

Why can`t I reply to the answer that paulm299 received to their post. It was very ambiguous.

refluxer

jondoc said:

 I cannot find any useful information ( on the Santander website or the Web ) of how to stop my Santander 23/24 Isa (on April 5th 2024 )  from transfering to another 24/25 Santander Isa ( as it did in 22/23 without my knowlege ). I would like to stop/cancel this;  what seems to be an automated transfer;  and close the Isa and pay the proceeds into my Santander Current/Chequing account. Help please.

What type of ISA is your Santander ISA and when did you open it ?

If it's an easy access ISA, then it will stay open until you close it by either withdrawing the money or transferring away. You would normally be free to do either of these at any time.

If it's a fixed rate ISA, then you get to choose what you want to do with it at the end of the fixed rate term and if they don't hear from you, it'll get converted to an easy access cash ISA and you can do what you like with it from there. If you withdraw or transfer away before the maturity date, you'll pay a (usually fairly hefty) penalty.

Whatever type of cash ISA it is, nothing special happens on the 5th April and no automatic transfers take place on that date. The tax year only dictates how much you can pay in between those dates.

refluxer

jondoc said:

My new Isa does not accept transfers, so I have to cash in the Santander Isa, then pay it into my new Isa on April 6th.

If you do that, you'll use some or all of your 2024-25 tax year ISA allowance unnecessarily. You would be better off opening a cash ISA that does allow transfers-in, in order to avoid this. Most ISA providers allow transfers-in, so your choice won't be particularly limited.

elkiedee

paulm

I think that if the bank does this, so long as you haven't added money to it since the start of this financial year and don't do so now, before/after maturity and the transfer, this should be ok. And then if you open a new account and follow the transfer procedure for your new ISA next year you should still have your £20K allowance to add to it. Have you asked the bank that holds your 2022/23 ISA about it? 

Also, the rules change next financial year (from April 2024), meaning you may be able to split your ISA allowance for payments between more than one account. 

I've recently done a bit of reorganisation on my savings but am considering my ISA options for April too. I expect to be checking both the general rules and the conditions of any new account I open though.

elkiedee

jondoc posted: My new Isa does not accept transfers, so I have to cash in the Santander Isa, then pay it into my new Isa on April 6th.

Is your new ISA one you opened in this tax year? I agree with Refluxer's response. If you're looking to transfer other ISAs, choose an account that has rates and access conditions that suit your needs but does accept transfers, whether you do it now or at the start of the next tax year. If you cash in the Santander ISA and put it in a new account in April, you'll lose interest (and possibly tax-free benefits) and part or all of your tax allowance for next year. And if you have more than £20K in the ISA you want to transfer, by following transfer procedures you can put it all into another ISA, whereas you'll be limited to £20K in a new account whether it comes from a cashed in ISA or new payments in. 

jondoc

Thanks to all for your invaluable advice. I`m now looking for another provider as you`ve all suggested.