Confused about my ISA

Flakie

I appreciate this topic has been covered before but I can only find very old threads.
And forgive the ignorance! 

My cash ISA is due to expire at the end of September this year. I’ve currently got just over £15000 in it. Ive had the letter explaining my options and want to change it to another ISA with the same interest rate I’m currently getting. Am I best off waiting till nearly the end of the month before changing it over so I get the maximum amount of interest?
And - this is the bit I don’t get - on my banking screen it says that the total funds that can be paid in is £19690! Why?!! I thought the maximum was £20k.
Thanks in advance.

Mark_d

I suggest following the advice in the letter.  If the new ISA is the same rate as the old ISA then you should be earning the same amount of interest.
The £20k limit is the maximum you can pay in during each tax year.  It does not matter how much money is sitting in your ISA

Flakie

Mark_d said:

I suggest following the advice in the letter.  If the new ISA is the same rate as the old ISA then you should be earning the same amount of interest.
The £20k limit is the maximum you can pay in during each tax year.  It does not matter how much money is sitting in your ISA

Thank you. So between now and next April I could, if I could afford it, put more than the limit in it and it would still count as tax free savings?

refluxer

If your ISA is a fixed rate cash ISA, then you need to wait until the maturity date otherwise you'll pay an interest penalty for transferring before then and these can often be fairly severe.

Are you sure the rate you're being offered for a new ISA is the same as the rate you're currently on ? The current best fixed rate cash ISAs are substantially higher than they were 2 or more years ago and quite a lot lower (around 1%) than they were this time last year.

If your ISA provider is telling you that you have £19,690 available from this years allowance, then that implies you've paid £310 into one or more of their cash ISAs since 6th April this year - is that not right ?

refluxer

Flakie said:

Mark_d said:

I suggest following the advice in the letter.  If the new ISA is the same rate as the old ISA then you should be earning the same amount of interest.
The £20k limit is the maximum you can pay in during each tax year.  It does not matter how much money is sitting in your ISA

Thank you. So between now and next April I could, if I could afford it, put more than the limit in it and it would still count as tax free savings?

The £20k ISA allowance is just a limit on how much you can pay into an ISA (or ISAs) during any one tax year - it is not a limit on the total amount you can have in an ISA.

Transfers of money paid into an ISA during previous tax years don't count towards the current tax year's £20k allowance, provided the money is transferred by the ISA providers (and you don't withdraw or move the money yourself).

Albermarle

I appreciate this topic has been covered before but I can only find very old threads.

The forum search function is not very good. Much better to spend some time just scrolling through the forum. Similar questions are asked regularly and recently.

Flakie

Thanks everyone. That’s all a little clearer now! I’ll check back on the statements to see how they stand. It’s not a fixed rate one but my bank currently has one that’s a better rate so I may lock it away for a year to get a little more. Appreciate your advice. 😀

PRAISETHESUN

Flakie said:

Mark_d said:

I suggest following the advice in the letter.  If the new ISA is the same rate as the old ISA then you should be earning the same amount of interest.
The £20k limit is the maximum you can pay in during each tax year.  It does not matter how much money is sitting in your ISA

Thank you. So between now and next April I could, if I could afford it, put more than the limit in it and it would still count as tax free savings?

The limit is £20k of new money each tax year across all ISA types. You cannot deposit more than this otherwise you will likely get into trouble with HMRC. There is no limit on the maximum balance you can hold however, so if your existing £15k is from previous years then you can still make new deposits as long as the total deposited this tax is not more than £20k.

Eg.

2023-2024 - deposited £15k - balance £15k
2024-2025 - deposited £20k - balance £35k