ISA opening confusion

Jezwed

Apologies if it's already been asked but couldn't find answer in forum.
I have £20K in an ISA due to mature in Sept 2025 (opened Sept 2024). I would like to open another cash ISA with approx £7K in this current tax year. What can I do with the £20K when it matures? I thought I could open a new one in this new tax year then transfer old ISA into new one but that will take me over £20K. I don't want my old ISA to sit there in an account with a pathetic interest rate after Sept. Would I only be able to transfer £13K of it so would still have £7K I couldn't invest in another ISA?

Brie

You can put IN £20k a year.  Doesn't mean you have to take previous years' money out!.  As I understand it you can shift it directly into another ISA.  But no doubt experts will be on their way to tell you something more specific.

p00hsticks

The £20k allowance applies to new money added into an ISA wrapper this tax year. Once money is in an ISA, then when the tax -year finishes it is effectively ring-fenced and doesn't get included in the next years allowance.

Check the rules of the particular ISA you already have, but it's likely that when it matures it will automatically be made into a variable rate ISA paying less interest, unless you specify otherwise - the ISA provider will probably be in touch as the maturity date approaches. . 

Provided that the particular new ISA you select allows transfers in, you can transfer the whole amount (plus interest added) from last years ISA  to the new ISA, and in addition put up to £20k new money in this year, either to the same one or to a different one.

Note that many fixed rate ISAs only have a limited time frame after opening in which to make deposits, so if you intend to use the same ISA for the old and new money you may wish to wait until the old one matures before opening the new one.  

Just make sure than the transfer in is handled by the new ISA provider in order to retain the ISA tax-free status - don't simply withdraw the money yourself. 

RobfromCornwall

Yes, you can transfer money from previous years' ISAs.  This does not affect the £20k you can add of new money each year. You initiate a transfer by contacting the provider you want to transfer to.

Jezwed

The ISA I'm looking at opening is a fixed rate for 1yr with Lloyds bank. My existing one is with Santander. LLoyds have told me £20K is the limit including transfers in. I didn't think that was right so hence my original post

p00hsticks

Jezwed said:

The ISA I'm looking at opening is a fixed rate for 1yr with Lloyds bank. My existing one is with Santander. LLoyds have told me £20K is the limit including transfers in. I didn't think that was right so hence my original post

It may be right for that particular ISA - it's up to a particular provider if they wish to accept transfers in or limit the total amount.

friolento

The £20k you mention refers to permitted ISA limit and doesn't apply to what you want to do. Permitted limits refer to inherited ISAs. You can ignore this. You can deposit £20k new money, plus transfer in however much you like.

When your existing ISA has matured, you can ask Lloyds to transfer it to your Lloyds ISA. You can put your transfer request in straight away, as they give you the option to transfer only once the other ISA has matured.

The terms and conditions for your ISA are here: https://www.lloydsbank.com/assets/media/pdfs/savings/fixed-rate-cash-isa-conditions.pdf

Jezwed

I've heard back from Lloyds after taking a screenshot from their website. They had given me incorrect info and yes I can transfer my ISA from a previous year and still invest £20K new money. Unfortunately I only have 60 days from opening to transfer so as my current ISA has a better interest rate and isn't due to mature until Sept I can't open one.  Will have to invest in a tax paying account until then. Just hope the ISA limit doesn't change in the meantime.

friolento

Your existing ISA is not subject to the annual deposit limit. The money in your existing ISA will retain its tax shelter as long as you do not withdraw it.

You can open as many ISAs as you like, so there is no  reason why you cannot put cash into a new ISA with Lloyds or anyone else now, and transfer your matured ISA to another ISA later in the year. That said, I have not seen anything in the Lloyds ISA T&Cs about a 60 day limit for transfers in. So there might be another misunderstanding.

Jezwed

friolento the 60days was mentioned in an online chat with Lloyds but given how they gave me incorrect info earlier maybe this is incorrect too....

Malchester

Jezwed said:

The ISA I'm looking at opening is a fixed rate for 1yr with Lloyds bank. My existing one is with Santander. LLoyds have told me £20K is the limit including transfers in. I didn't think that was right so hence my original post

No. They are wrong. I have just transferred over £29k into that same account. As others have said the £20k is new money