Move ISA start of tax year

lcorky44

Hello I opened the Moneybox ISA on 02/04/24 and deposited my funds from an easy access saver i had. I hadn't noticed that Moneybox was Annual interest. So i decided to open the Plum ISA which is monthly. 

What is the best was of transferring the money across, I've seen posted about not simply withdrawing the cash and re-depositing. But i don't understand why you would'nt do this.

Am i right in saying whatever way i should wait until the new tax year, so i get the full £20k allowance?

gravel_2

If you withdraw and reinvest you are removing the cash from the ISA wrapper and then adding it again as new money (therefore eating up your allowance unnecessarily). If you want to build up the amount of money inside the wrapper over a period of several years (and you are fortunate enough to have the cash to do so) then you do not want to withdraw, rather you want to transfer using the available mechanisms for transfer.

Note that Plum pays a lower amount of interest on transfers in vs new money.

As it stands you've opened an ISA this tax year and contribute 20k until 5 April. From 6 April you can contribute a further 20k to ISAs.

refluxer

The fact that Plum pay a lower rate of interest on ISA funds that are transferred-in is highly unusual as far as cash ISAs are concerned and presents you with a problem if you want to keep the ISA status of your funds and avoid getting this lower rate.

How much did you deposit in the Moneybox ISA ?

lcorky44

refluxer said:

The fact that Plum pay a lower rate of interest on ISA funds that are transferred-in is highly unusual as far as cash ISAs are concerned and presents you with a problem if you want to keep the ISA status of your funds and avoid getting this lower rate.

How much did you deposit in the Moneybox ISA ?

Yeah i wasn't aware of the lower rate. Is there any benefit of monthly interest other than seeing the amount increase each month so if needed to move again i have gained something.

I deposited just over £10k

Catplan

lcorky44 said:

refluxer said:

The fact that Plum pay a lower rate of interest on ISA funds that are transferred-in is highly unusual as far as cash ISAs are concerned and presents you with a problem if you want to keep the ISA status of your funds and avoid getting this lower rate.

How much did you deposit in the Moneybox ISA ?

Yeah i wasn't aware of the lower rate. Is there any benefit of monthly interest other than seeing the amount increase each month so if needed to move again i have gained something.

I deposited just over £10k

So usually interest is calculated daily…. If you transfer 30 days into then you’ll get the 30 days interest due, if you are six months in you’ll get interest regardless if interest is paid monthly or annually they’ll add what is due. Imo no benefit really if growing your pot…. Say you had 80k then monthly paid away might be worthwhile, really depends on circumstances if you wanted to get a monthly income for example and stay below protection threshold, it might come into play. 

refluxer

lcorky44 said:

refluxer said:

The fact that Plum pay a lower rate of interest on ISA funds that are transferred-in is highly unusual as far as cash ISAs are concerned and presents you with a problem if you want to keep the ISA status of your funds and avoid getting this lower rate.

How much did you deposit in the Moneybox ISA ?

Yeah i wasn't aware of the lower rate. Is there any benefit of monthly interest other than seeing the amount increase each month so if needed to move again i have gained something.

I deposited just over £10k

The AER for savings accounts paying monthly or annual interest is usually the same, so there is no financial benefit to choosing one over the other (other than the reason Catplan mentioned above, which only really has a worthwhile benefit for very large balances).

There can be tax reasons for choosing monthly interest to spread it over multiple tax years (or annual to postpone interest until a subsequent tax year) but these obviously don't apply to ISAs, where the interest is tax-free anyway.

Other reasons why people tend to choose monthly interest for savings accounts are because they either rely on the interest as income or they like to see their savings grow every month. If you only want the latter, then I can't see it's worth transferring to Plum and losing out on the headline rate and anyone wanting the former (and funding via a transfer) would probably be better off looking elsewhere.

lcorky44

refluxer said:

lcorky44 said:

refluxer said:

The fact that Plum pay a lower rate of interest on ISA funds that are transferred-in is highly unusual as far as cash ISAs are concerned and presents you with a problem if you want to keep the ISA status of your funds and avoid getting this lower rate.

How much did you deposit in the Moneybox ISA ?

Yeah i wasn't aware of the lower rate. Is there any benefit of monthly interest other than seeing the amount increase each month so if needed to move again i have gained something.

I deposited just over £10k

The AER for savings accounts paying monthly or annual interest is usually the same, so there is no financial benefit to choosing one over the other (other than the reason Catplan mentioned above, which only really has a worthwhile benefit for very large balances).

There can be tax reasons for choosing monthly interest to spread it over multiple tax years (or annual to postpone interest until a subsequent tax year) but these obviously don't apply to ISAs, where the interest is tax-free anyway.

Other reasons why people tend to choose monthly interest for savings accounts are because they either rely on the interest as income or they like to see their savings grow every month. If you only want the latter, then I can't see it's worth transferring to Plum and losing out on the headline rate and anyone wanting the former (and funding via a transfer) would probably be better off looking elsewhere.

Ah i've just checked with them and it gets a reduced rate due to the bonus not being applied to transfers. I missed out there. I dont rely on the income of interest i just like to see the money increase each month, i know the amount is the same at the end . I'll keep an eye out for any other Monthly ones with similar rates. But will ensure to transfer not withdraw

begbeer

I have opened a 5.25 Virgin ISA ready to fund tomorrow, phoned to ask if I could have monthly interest on it as I saw that on the 4,76 you could, but no joy.  but at that rate am going to go ahead,  can always have a spending spree on my credit card in March, and then use the interest earned to pay it off