Transfer or lose tax free status

khryne

Some background, I currently have 2 fixed rate cash ISAs as follows:

Bank A 1yr Fixed Cash ISA 4.10% ends Feb 26       approx £13k

Bank B 1yr Fixed Cash ISA 4.60% ends June 25     approx £15k

Both of these cash ISAs have filled up my 2024/2025 tax allowance of £20k. The figures are more than £20k in total because of interest and previous years transfers.

I have an additional £20k to put in for 2025/26 tax year which I can put in now/today.

I am looking at one of 3 options which are both with Bank A and B.

Option 1: It’s with Bank A and is a 1 Year Online cash ISA 4% variable (up to 3 withdrawals for free)

Option 2: Its with Bank A and is a 1yr fixed rate cash ISA @ 4.25%

Option 3: Its with Bank B and is a 1yr fixed rate cash ISA @ 4.25%

I want to keep the £15k plus interest at maturity as tax free in June 25.

I want to keep the £13k plus interest at maturity as tax free in Feb 26.

My question is, how can I do this? Open another fixed rate at maturity? or consolidate some into 1 account? or transfer?

Fixed rate cash ISAs don’t really allow transfers but they do become easy access accounts.

On maturity could I open another fixed rate ISA to put the 2024/25 money in? Would that affect my allowance if I go ahead today and put in the full 20k for 2025/26?

masonic

You can often arrange the transfer to be delayed until maturity. Providing you arrange through your new provider, transfers don't affect your current year allowance or vice versa, so you can use that today and transfer the fixed ISAs at maturity. To consolidate you'll probably need to use an easy access ISA, since fixed ISAs usually have a limited window for funding. There is no problem opening a new fixed ISA to receive each maturing ISA.

khryne

Thanks for your advice @masonic

So, would this work?
If I was to open a new cash ISA with the full £20k allowance today and make no transfer arrangements, when the older fixed cash isa expires in Jun 25 I can put that amount (plus the interest) into a new fixed rate ISA? It definitely doesn't count against your allowance for this tax year? 

masonic

khryne said:

Thanks for your advice @masonic

So, would this work?
If I was to open a new cash ISA with the full £20k allowance today and make no transfer arrangements, when the older fixed cash isa expires in Jun 25 I can put that amount (plus the interest) into a new fixed rate ISA? It definitely doesn't count against your allowance for this tax year? 

Correct. Just make sure you use the correct ISA transfer process, as if you withdraw it yourself and then pay it into another ISA it would count against your allowance.