What to do with maxed out isa interest

clairewglass1

Hi. I have one ISA that I maxed out last year (£20,000).
It will have earned £1000 in interest by the time it is due to end.
Am I best to leave the £21000 in the same ISA or should I transfer it if there is a better deal elsewhere.
If I do transfer it - can I only transfer £20,000? If so, what is the best thing to do with the £1000 interest?
 I will also have saved a further £20,000 to put in a new ISA.
Can I have three ISA's - one with the original £20,000 - one with the £1000 interest - one with the new £20,000
Sorry if this is confusing - Im new to ISA's.
Many thanks in advance of advice.

Sarahspangles

From this year you can open multiple ISAs in the same year and move savings between them more freely, including the interest. So you could have the three ISA combo you describe. Be careful to move money through the new ISA’s transfer process so the tax free status isn’t lost (withdrawing to a current account would remove the status)

You could have £20k in a fixed term ISA and another ISA that is ‘flexible’.

mebu60

The £20k annual allowance per tax year is for new money. 
You can transfer-out the £21k, just make sure the new provider accepts transfers-in and use their transfer-in process for the switch to protect the tax-free status of your funds. 
You can add the new £20k to the new cash ISA too so it is all with one provider. Ensure that you remain within the £85k FSCS protection limit for all your funds with that provider (in case you have anything else with them). 

Albermarle

clairewglass1 said:

Hi. I have one ISA that I maxed out last year (£20,000).
It will have earned £1000 in interest by the time it is due to end.
Am I best to leave the £21000 in the same ISA or should I transfer it if there is a better deal elsewhere.
If I do transfer it - can I only transfer £20,000? If so, what is the best thing to do with the £1000 interest?
 I will also have saved a further £20,000 to put in a new ISA.
Can I have three ISA's - one with the original £20,000 - one with the £1000 interest - one with the new £20,000
Sorry if this is confusing - Im new to ISA's.
Many thanks in advance of advice.

It can be confusing, but if you read through the forum, you will see lots of similar questions and answers, which will be informative for you. 

jimjames

Moving out the interest would be a bad idea unless you want to spend the money. If not then you'll lose that allowance by taking it out of the ISA

Beddie

You can transfer all of it, including the interest. The £20k limit is how much you can pay in - once it's in you can transfer all or some of it, or leave it where it is.

saajan_12

clairewglass1 said:

Hi. I have one ISA that I maxed out last year (£20,000).
It will have earned £1000 in interest by the time it is due to end.
Am I best to leave the £21000 in the same ISA or should I transfer it if there is a better deal elsewhere.
If I do transfer it - can I only transfer £20,000? If so, what is the best thing to do with the £1000 interest?
 I will also have saved a further £20,000 to put in a new ISA.
Can I have three ISA's - one with the original £20,000 - one with the £1000 interest - one with the new £20,000
Sorry if this is confusing - Im new to ISA's.
Many thanks in advance of advice.

You can, but you don't need to have 3 separate accounts. The 20k limit only applies to new money going from <non-ISA> account to <ISA account>. If you're transferring existing balances between ISAs then as long as you use the provider's porting process, it doesn't matter how much you transfer - it may well exceed 20k as you have interest and past balances accumulate. 

To keep it simple, I personally would find the best rate ISA and put the new money (upto 20k) in there, and ask that provider to instigate a transfer in of the existing 21k in the same account.