2024/25 ISA

bestoffer

Hello I am looking to move a flexible 2024/25 ISA to a flexible 2025/26 ISA because I will not be using all my allowance for the coming year  and the new ISA has a better interest rate. Would there be any problem with just withdrawing the funds and paying into new ISA rather than the agro of doing the usual transfer.

refluxer

When transferring from one cash ISA to another, it makes sense to do an ISA transfer (using the new provider's official ISA transfer process) because if you withdraw the money from the old ISA yourself and pay it into the new one, it would count again towards the current tax year's ISA allowance and if the amounts involved were large, then this might even prevent you from being able to re-deposit some or all of it back into an ISA until the new tax year starts.

ISA transfers are normally pretty straightforward these days, at least as far as the majority of established banks and building societies are concerned (you can sometimes have issues with some of the newer players, which is something to bear in mind when looking at the top of the current 'best-buy' easy access cash ISA table). If you involve two ISA providers who both utiltise electronic ISA transfers, then transfers these days are normally carried out with minimal hassle and can be as quick as 1-2 days in some cases.

Incidentally - there isn't really any such thing as a '2025/26 ISA'. The tax year is only relevant when considering how much you can pay into an ISA (or ISAs) each tax year, £20k being the current allowance.

FrugaiMacDugal

If you want to transfer, never withdraw money from a cash ISA! You'll immediately lose all the lasting tax benefits.

Instead, speak to the new provider and fill in an ISA transfer form. Your new provider should then sort it all out, including moving the money over for you – keeping your ISA cash permanently tax-free.

Ayr_Rage

Transfer!

Even if you think you won't be using your allowance you cannot legislate for a lottery or Premium Bond win.

TheTelltaleChart

Ayr_Rage said:

Even if you think you won't be using your allowance you cannot legislate for a lottery or Premium Bond win.

You can. I've never bought a lottery ticket, and cashed in my tiny holding of Premium Bonds long ago.

Though I don't entirely disagree, in that there may still be "risks" such as getting a higher-paid job, or an inheritance.

It depends a bit on how likely you reckon such things are to happen to you personally. If they're very remote "risks", why bother? If you end up a lot richer, you'll pay more tax, which you'll be able to afford, so not really a problem.

t0rt0ise

bestoffer said:

Hello I am looking to move a flexible 2024/25 ISA to a flexible 2025/26 ISA because I will not be using all my allowance for the coming year  and the new ISA has a better interest rate. Would there be any problem with just withdrawing the funds and paying into new ISA rather than the agro of doing the usual transfer.

I find that there's more agro trying to move money out of my current account to put in a new ISA due to their safety checks. Am I being asked by some scammer to move the money? Where did the money come from in the first place? And on and on. Easier to fill in a form and get it done by the receiving bank.