Upgrading ISA After Maturity

tech_otaku

I have two cash ISAs with Santander. One was opened on 25/03/2023 in the 2022/23 tax year and the other on 12/04/2023 in the 2023/24 tax year.

The first matured on 25/03/2024 (2023/24) and the second on 12/04/2024 (2024/25) when they both became ISA saver accounts on lower interest rates.

On the 14/04/2024 (2024/25) I upgraded both to 1-year Fixed Rate ISAs with Santander. It's my  understanding that - in general - ISAs can be upgraded within 28 days of maturity. What I'm not clear about - even after speaking with Santander - is how upgrading both these ISAs AFTER maturity affects my ISA allowance for the 2024/25 tax year in which they were upgraded. 

Do I still have my full ISA allowance for 2024/25 or has it bee reduced by the combined total of the aforementioned ISAs?

Any clarification is greatly appreciated. 

Mark_d

Whether your ISA is a fixed rate, an "ISA Saver", or an "upgraded ISA" it does not affect your ISA allowance.  It is not new money being put in.  It is the equivalent of an ISA transfer.

Albermarle

tech_otaku said:

I have two cash ISAs with Santander. One was opened on 25/03/2023 in the 2022/23 tax year and the other on 12/04/2023 in the 2023/24 tax year.

The first matured on 25/03/2024 (2023/24) and the second on 12/04/2024 (2024/25) when they both became ISA saver accounts on lower interest rates.

On the 14/04/2024 (2024/25) I upgraded both to 1-year Fixed Rate ISAs with Santander. It's my  understanding that - in general - ISAs can be upgraded within 28 days of maturity. What I'm not clear about - even after speaking with Santander - is how upgrading both these ISAs AFTER maturity affects my ISA allowance for the 2024/25 tax year in which they were upgraded. 

Do I still have my full ISA allowance for 2024/25 or has it bee reduced by the combined total of the aforementioned ISAs?

Any clarification is greatly appreciated. 

If you read through the forum, then you will see lots of similar questions and answers, so worth a read through.

slinger2

It's confusing to use the term "upgraded". When you "transfer" an ISA you're not using any of your allowance for any year. That applies whether you transfer to another provider or just to a different product with the same provider.

refluxer

tech_otaku said:

It's my understanding that - in general - ISAs can be upgraded within 28 days of maturity. 

It's worth nothing that, while Santander do allow you to 'upgrade' (transfer internally) to another Santander ISA account up to 28 days before the maturity of one of their fixed rate ISAs (and move onto the new rate immediately), this definitely isn't a general rule. I've not personally come across any other ISA providers who allow you to do this - the majority will only allow you to transfer either internally or externally (without penalty) after a fixed rate ISA matures.

If a fixed rate ISA has matured into an easy access ISA, then you're usually free to transfer whenever you like without penalty and (as already mentioned) transfers of ISAs containing subscriptions paid in in previous tax years won't count towards the current tax year's allowance, provided you use the new ISA provider's transfer process and don't withdraw/move the money yourself.

tech_otaku

Thanks to @Mark_d, @slinger2 and @refluxer for your easy to understand answers and clarification. It's what I hoped I'd hear.

slinger2 said:

It's confusing to use the term "upgraded".

It is. I agree. However, It's the term Santander use. No wonder I couldn't understand what they were telling me.