FLEXIBLE old ISA to partly fund new ISA when transfers not allowed....

Nourse79

Hiya,

Is the following scenario feasible : 

Old Flexible Cash ISA  "A" at 2% with 50K of previous years' contributions.

New Cash ISA "B" (does not accept transfers) opened this tax year at 4% with new £2K leaving £18K to add for this tax year.

Easy Access savings account  "X" opened at 5% with 35K taken from old flexible Cash ISA  "A" leaving 15K in ISA "A".

Could £18K be taken from Savings "X"  to top up new Cash ISA "B"  (Total of 20K at 4%).

This would reduce the amount of money to be replaced into Cash ISA "A" to £17K  (from the ordinary savings X) before 06.04.2026 thus bringing down the old cash ISA "A" to 32K at 2%.

Does that make sense and above all is it allowed ?

Thanks you in advance for clarification.

eskbanker

What you suggest is allowed - whether it makes sense or not is up to you, depending on your tax situation, etc, but if you're trying to maximise interest it would seem more obvious to replenish ISA A with everything withdrawn from it and transfer it all into a new flexible ISA (accepting transfers) at a better rate, rather than being stuck on 2% for anything.  Once there, you could continue to reallocate funds around your accounts as you see fit....

clairec666

Or similar to what eskbanker suggested but transfer from your old 2% account to a higher-rate flexible ISA first, then withdraw from that account and replenish it any time up until next April

(unless of course you've already withdrawn from ISA A, in which case you can only replace the funds into the same account)

eskbanker

clairec666 said:

Or similar to what eskbanker suggested but transfer from your old 2% account to a higher-rate flexible ISA first, then withdraw from that account and replenish it any time up until next April

(unless of course you've already withdrawn from ISA A, in which case you can only replace the funds into the same account)

I certainly understood OP to mean that ISA A started the tax year at £50K but that £35K had been withdrawn since then, to feed the taxable account, hence suggesting putting it back before transferring, in order to minimise unnecessary loss of ISA status of any funds.

clairec666

eskbanker said:

clairec666 said:

Or similar to what eskbanker suggested but transfer from your old 2% account to a higher-rate flexible ISA first, then withdraw from that account and replenish it any time up until next April

(unless of course you've already withdrawn from ISA A, in which case you can only replace the funds into the same account)

I certainly understood OP to mean that ISA A started the tax year at £50K but that £35K had been withdrawn since then, to feed the taxable account, hence suggesting putting it back before transferring, in order to minimise unnecessary loss of ISA status of any funds.

Ah, fair point. In which case, definitely keep ISA A open. See if a partial transfer out is possible, to get a better rate for the remaining money.