Do i have to transfer into a new ISA?

wenger08

I don't understand this line in the MSE guidlines:

• If you want to transfer, don't withdraw your cash and transfer it manually. You'll lose all tax benefits if you do. Instead, speak to the new provider and fill in an ISA transfer form. Your new provider will then move the money over for you – keeping your ISA cash permanently tax-free.

Its confusing me. Its making it sound like i can only do a transfer from my old ISA into my new ISA?

My natwest ISA has ended/matured. I want to open a new ISA, do i need to transfer from my old Natwest ISA into my new one? (im thinking of going with coventry building society 1 year ISA)

I'm only going to be depositing £20,000 so can i just close my old ISA, send the cash to my current account, open the new ISA and send the money from my current account?

So whats the best way of putting the money into my new ISA with Coventry building society?

Thanks

powerful_Rogue

Transfer into the Coventry ISA.

https://www.coventrybuildingsociety.co.uk/member/help/savings/a-guide-to-cash-isas/transfer-an-isa-into-or-within-cbs.html

Ayr_Rage

If the funds are from a previous tax year then if you transfer them they do not count towards this year's allowance, so if you you have a windfall or spare money you can contribute a further £20,000.

If you only ever plan to keep £20,000 in an ISA taking cash out and then opening a new ISA also works but uses up your annual allowance.

maman

I've always found Coventry Customer Service very helpful. If you don't have a local branch, call them and they'll talk you through it and answer your questions. 

Don’t withdraw the money from your existing isa, they'll do the transfer. 

slinger2

If you do a transfer from one ISA to another, you don't use any of this year's allowance. If you simply withdraw the money and put it into a new ISA, you'll be using this year's allowance. That's ok if the £20k is all you want to do this tax year, but you only do that if you've not put any money into an ISA this tax year and also it does mean you won't be able to put any more money into any ISA until next April. (situation is different if you're withdrawing this year's money from a flexible ISA, but it seems that that's not the case).

So the general advice is to do a transfer. However if you're happy to "waste" this year's allowance you can take the other approach.

Ch1ll1Phlakes

wenger08 said:

I don't understand this line in the MSE guidlines:

• If you want to transfer, don't withdraw your cash and transfer it manually. You'll lose all tax benefits if you do. Instead, speak to the new provider and fill in an ISA transfer form. Your new provider will then move the money over for you – keeping your ISA cash permanently tax-free.

Its confusing me. Its making it sound like i can only do a transfer from my old ISA into my new ISA?
EDIT: Not the case but it's better to do so

My natwest ISA has ended/matured. I want to open a new ISA, do i need to transfer from my old Natwest ISA into my new one? (im thinking of going with coventry building society 1 year ISA)

I'm only going to be depositing £20,000 so can i just close my old ISA, send the cash to my current account, open the new ISA and send the money from my current account?
EDIT: You can do this but it's not the best method

So whats the best way of putting the money into my new ISA with Coventry building society?
EDIT: Use the transfer method 

Thanks

You can do what you say but it's to do with current and previous contributions. You can pay in £20k EACH tax-year, meaning if you put £20k in last tax-year you could pay in ANOTHER £20k this tax-year and have £40k total in ISAs. You don't say what's in your Natwest ISA but I'll give an example here.

Let's say you have £20k in your Natwest ISA with deposits from a previous tax-year. At maturity you could transfer the ISA or withdraw it. If you transfer it you can still pay this years £20k in an ISA so a total of £40k. However, If you withdraw you get the cash in you bank account but you can only pay £20k into ISA this year meaning the maximum you can now have is £20k. So by transferring you keep this years allowance whereas by withdrawing and then redepositing you lose your allowance. That's what the MSE line is referring to.

Now I note you only want to put £20k in an ISA (though this may be because you think you can't keep more than this in an ISA - which you can) if this is the case you should only withdraw that is over the £20k and then transfer the rest to your new ISA account. This way you keep your allowance and say in a few months time you wanted to open another ISA you could.


Also I don't want to confuse things but Coventry allows partial transfers (if you want this explained just shout)

Hope this helps, if you're still not sure let me know.

mebu60

wenger08 said:

So whats the best way of putting the money into my new ISA with Coventry building society?

The best way is to open the new Coventry cash ISA and transfer in your NatWest ISA proceeds. You can transfer the whole amount including any interest, even if it exceeds £20k. As it is an ISA opened in a previous tax year it does not count towards your £20k of new money for the current tax year. So you could add up to £20k to it too if you wished. 

If you do only want to move £20k you can explicitly request Coventry just to transfer-in that amount then close the NatWest ISA and withdraw the interest if that's what you wish to do. But you don't have to, as already stated, you can transfer the whole sum as it's from a previous tax year (regardless of when the interest was paid).

You can also do what you say, withdraw from the NatWest and pay £20k into Coventry but that will then be treated as new money and use your ISA allowance for the current tax year. I would suggest keeping your options open and use the transfer-in process that Coventry will manage for you. Then if you want to add to the Coventry ISA when opening it or open a completely different ISA during this current tax year you will be able to do so. 

wenger08

mebu60 said:

wenger08 said:

So whats the best way of putting the money into my new ISA with Coventry building society?

The best way is to open the new Coventry cash ISA and transfer in your NatWest ISA proceeds. You can transfer the whole amount including any interest, even if it exceeds £20k. As it is an ISA opened in a previous tax year it does not count towards your £20k of new money for the current tax year. So you could add up to £20k to it too if you wished. 

If you do only want to move £20k you can explicitly request Coventry just to transfer-in that amount then close the NatWest ISA and withdraw the interest if that's what you wish to do. But you don't have to, as already stated, you can transfer the whole sum as it's from a previous tax year (regardless of when the interest was paid).

You can also do what you say, withdraw from the NatWest and pay £20k into Coventry but that will then be treated as new money and use your ISA allowance for the current tax year. I would suggest keeping your options open and use the transfer-in process that Coventry will manage for you. Then if you want to add to the Coventry ISA when opening it or open a completely different ISA during this current tax year you will be able to do so. 

Thanks everyone for your replies

I will have £22,200 in my natwest ISA once it matures in a couple of days time. I want to take the interest out that ive earned and just use £20,000. Should i withdraw the £2200 first and then transfer into my new ISA that i open with Coventry building society?

Or should i transfer the £20,000 first and then take the interest ive earned out later? Would it even make a difference which way round i did it?

I do have another £16,500 in a different ISA. My plan was to take out £1500 and then use the rest (£15,000) and i was just going to throw into a savings account like Cahoot who are paying 4.4%

I don't see the benefit of having to transfer from one ISA into another and then using the £15,000 in a brand new ISA, unless im missing something here?

As i understand it, as long as im not earning in the top tax bracket (which im not) i can earn up to £1000 a year tax free on savings. so for example my £15,000 with cahoot at 4.4% would earn £660. So well below the £1000

So isnt it just easier for me to, withdraw everything from my natwest ISA to my bank account, open a new ISA with coventry building society. No need to transfer, just deposit.

And then do the same with my other ISA, withdraw to bank account, open savings account with Cahoot and deposit into there?

Why do i need to open 2 new ISA's? I don't see the benefit in my situation, unless im missing something here?

Thanks

Ch1ll1Phlakes

wenger08 said:

I will have £22,200 in my natwest ISA once it matures in a couple of days time. I want to take the interest out that ive earned and just use £20,000. Should i withdraw the £2200 first and then transfer into my new ISA that i open with Coventry building society?

Or should i transfer the £20,000 first and then take the interest ive earned out later? Would it even make a difference which way round i did it?

It shouldn't matter which order you do it but I'd say withdraw the interest before because then you're not waiting on the interest.

wenger08 said:

I do have another £16,500 in a different ISA. My plan was to take out £1500 and then use the rest (£15,000) and i was just going to throw into a savings account like Cahoot who are paying 4.4%

I don't see the benefit of having to transfer from one ISA into another and then using the £15,000 in a brand new ISA, unless im missing something here?

It's all about keeping the allowance you've built from previous years. If you're are happy to sacrifice it go ahead.

As i understand it, as long as im not earning in the top tax bracket (which im not) i can earn up to £1000 a year tax free on savings. so for example my £15,000 with cahoot at 4.4% would earn £660. So well below the £1000

Yes that would be fine. It's under your personal savings allowance, unless you have other savings.

So isnt it just easier for me to, withdraw everything from my natwest ISA to my bank account, open a new ISA with coventry building society. No need to transfer, just deposit.

And then do the same with my other ISA, withdraw to bank account, open savings account with Cahoot and deposit into there?

Why do i need to open 2 new ISA's? I don't see the benefit in my situation, unless im missing something here?

You don't need to open two new ISAs but if you do this with your approx £35-40k already in ISAs and deposit £20k into a Coventry ISA that's it. You won't be able to move any of it back into ISAs until the next tax-year as you'll have used all your allowance. What if you saw an ISA you wanted in 3-6 months time, though you may not, and wanted to move the £15k into it.

Even if you only transfer the £20k you'll maintain this years allowance for if, and I mean if, you might need or want it. The withdrawal and deposit method will sacrifice all built ISA allowances and use up this years to completion.

wenger08

Ch1ll1Phlakes said:

wenger08 said:

I will have £22,200 in my natwest ISA once it matures in a couple of days time. I want to take the interest out that ive earned and just use £20,000. Should i withdraw the £2200 first and then transfer into my new ISA that i open with Coventry building society?

Or should i transfer the £20,000 first and then take the interest ive earned out later? Would it even make a difference which way round i did it?

It shouldn't matter which order you do it but I'd say withdraw the interest before because then you're not waiting on the interest.

wenger08 said:

I do have another £16,500 in a different ISA. My plan was to take out £1500 and then use the rest (£15,000) and i was just going to throw into a savings account like Cahoot who are paying 4.4%

I don't see the benefit of having to transfer from one ISA into another and then using the £15,000 in a brand new ISA, unless im missing something here?

It's all about keeping the allowance you've built from previous years. If you're are happy to sacrifice it go ahead.

As i understand it, as long as im not earning in the top tax bracket (which im not) i can earn up to £1000 a year tax free on savings. so for example my £15,000 with cahoot at 4.4% would earn £660. So well below the £1000

Yes that would be fine. It's under your personal savings allowance, unless you have other savings.

So isnt it just easier for me to, withdraw everything from my natwest ISA to my bank account, open a new ISA with coventry building society. No need to transfer, just deposit.

And then do the same with my other ISA, withdraw to bank account, open savings account with Cahoot and deposit into there?

Why do i need to open 2 new ISA's? I don't see the benefit in my situation, unless im missing something here?

You don't need to open two new ISAs but if you do this with your approx £35-40k already in ISAs and deposit £20k into a Coventry ISA that's it. You won't be able to move any of it back into ISAs until the next tax-year as you'll have used all your allowance. What if you saw an ISA you wanted in 3-6 months time, though you may not, and wanted to move the £15k into it.

Even if you only transfer the £20k you'll maintain this years allowance for if, and I mean if, you might need or want it. The withdrawal and deposit method will sacrifice all built ISA allowances and use up this years to completion.

"It's all about keeping the allowance you've built from previous years. If you're are happy to sacrifice it go ahead"

I see, that makes more sense. So do i not pay tax on all the money i keep in ISA's then? Or is only the £20,000 i put in THIS year free from tax?

As it stands i only have this £35,000 I dont see me being about to throw in another £20,000 from next year April 2026

What do you think is best to do in my situation? I understand there are penalties if i withdraw early from a fixed rate ISA. I don't plan to withdraw anything from that £35,000 over the next 12 months to be honest.


Thanks

maman

That's right, you don't pay tax on any money you keep in isas.