Do i have to transfer into a new ISA?

Ch1ll1Phlakes

wenger08 said:

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

All money in ISAs earns interest tax-free, that means all your £35000 earns interest tax-free not just the £20,000 you put in this year. The more allowance you accumulate across tax-years the more funds you have that won't be taxable as long as they stay within the ISA wrapper.

It's fine if you don't think you'll have more funds to throw into ISAs next tax-year.

In your situation at a minimum I would do an ISA transfer for the £20,000 as this keeps in within the ISA wrapper and doesn't use any of this years allowance.

Moving the £15k to cahoot is reasonable as you will have your £20k allowance left this tax-year to pay it back into ISAs if you so desire. Even if you don't do it this TY you could easily do it next TY as you said you don't expect to have more funds to add to ISAs next year.

You are correct to note there are penalties if you withdraw early from a fixed rate ISA. If you're thinking you need some accessible funds it is reasonable a do so and keep an emergency fund in an easy access account like Cahoot. Though you mention you're unlikely to withdraw in the next 12 months and if so, with interest rates gradually reducing you should note that the cahoot account is variable and the interest rate could drop in the near future.

Without trying to over complicate this for you, as you mentioned earlier you won't be near your PSA with £15k at 4.4% in cahoot so if you're looking a higher interest rate than the ISA, that's fixed you could consider 1 Year Fixed Rate Bond (i.e. non-ISA) but it's up to you.

As I said already at a minimum I think it's sensible to maintain some of your built ISA allowances (by transferring the £20k) but as you have some room to work with in this years allowance what you do with your other funds (the £15k + anything else) is entirely up to you and won't harm your ISA allowances in the long run (as you probably wouldn't have accumulated anything more than £35k in ISAs anyway.)

I hope this helps you make sense of all this. Take some time to consider it and send in further messages if you need more help or suggestions. Always happy to help and sorry these messages have been quite long but don't want to leave anything out and leave you confused by something I said.

wenger08

Ch1ll1Phlakes said:

wenger08 said:

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

All money in ISAs earns interest tax-free, that means all your £35000 earns interest tax-free not just the £20,000 you put in this year. The more allowance you accumulate across tax-years the more funds you have that won't be taxable as long as they stay within the ISA wrapper.

It's fine if you don't think you'll have more funds to throw into ISAs next tax-year.

In your situation at a minimum I would do an ISA transfer for the £20,000 as this keeps in within the ISA wrapper and doesn't use any of this years allowance.

Moving the £15k to cahoot is reasonable as you will have your £20k allowance left this tax-year to pay it back into ISAs if you so desire. Even if you don't do it this TY you could easily do it next TY as you said you don't expect to have more funds to add to ISAs next year.

You are correct to note there are penalties if you withdraw early from a fixed rate ISA. If you're thinking you need some accessible funds it is reasonable a do so and keep an emergency fund in an easy access account like Cahoot. Though you mention you're unlikely to withdraw in the next 12 months and if so, with interest rates gradually reducing you should note that the cahoot account is variable and the interest rate could drop in the near future.

Without trying to over complicate this for you, as you mentioned earlier you won't be near your PSA with £15k at 4.4% in cahoot so if you're looking a higher interest rate than the ISA, that's fixed you could consider 1 Year Fixed Rate Bond (i.e. non-ISA) but it's up to you.

As I said already at a minimum I think it's sensible to maintain some of your built ISA allowances (by transferring the £20k) but as you have some room to work with in this years allowance what you do with your other funds (the £15k + anything else) is entirely up to you and won't harm your ISA allowances in the long run (as you probably wouldn't have accumulated anything more than £35k in ISAs anyway.)

I hope this helps you make sense of all this. Take some time to consider it and send in further messages if you need more help or suggestions. Always happy to help and sorry these messages have been quite long but don't want to leave anything out and leave you confused by something I said.

Thanks so much for a detailed reply. Much appreciated! 

Can i transfer from 2 of my old ISA's into one new ISA? (so the £20,000 + the £15,000) Or is it only one transfer allowed from one ISA when opening a new ISA?

Thanks

Ocelot

You can transfer more than one old ISA into a new ISA, assuming their terms allow this. I once transferred three old ISAs to one provider at the same time.

wenger08

Ocelot said:

You can transfer more than one old ISA into a new ISA, assuming their terms allow this. I once transferred three old ISAs to one provider at the same time.

Thanks

this line on the coventry building society is confusing me:

• You can also transfer in current and/or previous years’ ISA savings using an ISA transfer. If you’re transferring in your current year’s savings then you must transfer all of it, as you are only able to pay into one cash ISA with us per tax year.

Does this mean i cant withdraw my interest earned from my previous years' ISA's and i have to transfer the whole amount?

Ch1ll1Phlakes

wenger08 said:

Ch1ll1Phlakes said:

wenger08 said:

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

All money in ISAs earns interest tax-free, that means all your £35000 earns interest tax-free not just the £20,000 you put in this year. The more allowance you accumulate across tax-years the more funds you have that won't be taxable as long as they stay within the ISA wrapper.

It's fine if you don't think you'll have more funds to throw into ISAs next tax-year.

In your situation at a minimum I would do an ISA transfer for the £20,000 as this keeps in within the ISA wrapper and doesn't use any of this years allowance.

Moving the £15k to cahoot is reasonable as you will have your £20k allowance left this tax-year to pay it back into ISAs if you so desire. Even if you don't do it this TY you could easily do it next TY as you said you don't expect to have more funds to add to ISAs next year.

You are correct to note there are penalties if you withdraw early from a fixed rate ISA. If you're thinking you need some accessible funds it is reasonable a do so and keep an emergency fund in an easy access account like Cahoot. Though you mention you're unlikely to withdraw in the next 12 months and if so, with interest rates gradually reducing you should note that the cahoot account is variable and the interest rate could drop in the near future.

Without trying to over complicate this for you, as you mentioned earlier you won't be near your PSA with £15k at 4.4% in cahoot so if you're looking a higher interest rate than the ISA, that's fixed you could consider 1 Year Fixed Rate Bond (i.e. non-ISA) but it's up to you.

As I said already at a minimum I think it's sensible to maintain some of your built ISA allowances (by transferring the £20k) but as you have some room to work with in this years allowance what you do with your other funds (the £15k + anything else) is entirely up to you and won't harm your ISA allowances in the long run (as you probably wouldn't have accumulated anything more than £35k in ISAs anyway.)

I hope this helps you make sense of all this. Take some time to consider it and send in further messages if you need more help or suggestions. Always happy to help and sorry these messages have been quite long but don't want to leave anything out and leave you confused by something I said.

Thanks so much for a detailed reply. Much appreciated! 

Can i transfer from 2 of my old ISA's into one new ISA? (so the £20,000 + the £15,000) Or is it only one transfer allowed from one ISA when opening a new ISA?

Thanks

As mentioned above you can transfer as many ISAs as you want into a new ISA account. So both the £20000 in #1 and £15000 in #2 could be transfer into a new one #3 (total £35000).wenger08 said:

Ocelot said:

You can transfer more than one old ISA into a new ISA, assuming their terms allow this. I once transferred three old ISAs to one provider at the same time.

Thanks

this line on the coventry building society is confusing me:

• You can also transfer in current and/or previous years’ ISA savings using an ISA transfer. If you’re transferring in your current year’s savings then you must transfer all of it, as you are only able to pay into one cash ISA with us per tax year.

Does this mean i cant withdraw my interest earned from my previous years' ISA's and i have to transfer the whole amount?

From what you've written all your ISA deposits are from previous tax-years, which means you haven't used your current year allowance. Coventry's language here causes a little confusion so here's it tweaked for clarity.

• You can also transfer in current and/or previous years’ ISA savings using an ISA transfer. If you’re transferring in your current year’s subscriptions then you must transfer all of it, as you are only able to pay into one cash ISA with us per tax year.

You are not transferring current year subscriptions so you don't have to worry about this. You can withdraw your interest.

Here's some more detail if you want to understand this better.
Furthermore, if you withdraw before a transfer (or after as we've discussed) these withdrawals fall outside the ISA. This means if you withdraw some funds before a transfer, the receiving provider (in your case Coventry) does not know about this withdrawal. They only get told what's in the ISA when you go to transfer it.

Here's an example.
You will have £22,200 in your Natwest ISA. You will withdraw £2200 for it leaving £20,000 in the account. You submit a transfer request to Coventry who contact Natwest. Natwest has £20,000 in the ISA so they tell Coventry this amount and Coventry processes this request. Coventry never know or see the £2200 so they don't so they don’t include it in the transfer. The £2,200 you withdrew has lost its ISA status the moment it left NatWest — it’s just ordinary savings now. Coventry only ever receives the £20,000 balance that remains inside the ISA wrapper.

Hope this helps. If you're not sure how to do an ISA transfer let us know an we'll give you some guidance.

wenger08

Ch1ll1Phlakes said:

wenger08 said:

Ch1ll1Phlakes said:

wenger08 said:

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

All money in ISAs earns interest tax-free, that means all your £35000 earns interest tax-free not just the £20,000 you put in this year. The more allowance you accumulate across tax-years the more funds you have that won't be taxable as long as they stay within the ISA wrapper.

It's fine if you don't think you'll have more funds to throw into ISAs next tax-year.

In your situation at a minimum I would do an ISA transfer for the £20,000 as this keeps in within the ISA wrapper and doesn't use any of this years allowance.

Moving the £15k to cahoot is reasonable as you will have your £20k allowance left this tax-year to pay it back into ISAs if you so desire. Even if you don't do it this TY you could easily do it next TY as you said you don't expect to have more funds to add to ISAs next year.

You are correct to note there are penalties if you withdraw early from a fixed rate ISA. If you're thinking you need some accessible funds it is reasonable a do so and keep an emergency fund in an easy access account like Cahoot. Though you mention you're unlikely to withdraw in the next 12 months and if so, with interest rates gradually reducing you should note that the cahoot account is variable and the interest rate could drop in the near future.

Without trying to over complicate this for you, as you mentioned earlier you won't be near your PSA with £15k at 4.4% in cahoot so if you're looking a higher interest rate than the ISA, that's fixed you could consider 1 Year Fixed Rate Bond (i.e. non-ISA) but it's up to you.

As I said already at a minimum I think it's sensible to maintain some of your built ISA allowances (by transferring the £20k) but as you have some room to work with in this years allowance what you do with your other funds (the £15k + anything else) is entirely up to you and won't harm your ISA allowances in the long run (as you probably wouldn't have accumulated anything more than £35k in ISAs anyway.)

I hope this helps you make sense of all this. Take some time to consider it and send in further messages if you need more help or suggestions. Always happy to help and sorry these messages have been quite long but don't want to leave anything out and leave you confused by something I said.

Thanks so much for a detailed reply. Much appreciated! 

Can i transfer from 2 of my old ISA's into one new ISA? (so the £20,000 + the £15,000) Or is it only one transfer allowed from one ISA when opening a new ISA?

Thanks

As mentioned above you can transfer as many ISAs as you want into a new ISA account. So both the £20000 in #1 and £15000 in #2 could be transfer into a new one #3 (total £35000).wenger08 said:

Ocelot said:

You can transfer more than one old ISA into a new ISA, assuming their terms allow this. I once transferred three old ISAs to one provider at the same time.

Thanks

this line on the coventry building society is confusing me:

• You can also transfer in current and/or previous years’ ISA savings using an ISA transfer. If you’re transferring in your current year’s savings then you must transfer all of it, as you are only able to pay into one cash ISA with us per tax year.

Does this mean i cant withdraw my interest earned from my previous years' ISA's and i have to transfer the whole amount?

From what you've written all your ISA deposits are from previous tax-years, which means you haven't used your current year allowance. Coventry's language here causes a little confusion so here's it tweaked for clarity.

• You can also transfer in current and/or previous years’ ISA savings using an ISA transfer. If you’re transferring in your current year’s subscriptions then you must transfer all of it, as you are only able to pay into one cash ISA with us per tax year.

You are not transferring current year subscriptions so you don't have to worry about this. You can withdraw your interest.

Here's some more detail if you want to understand this better.
Furthermore, if you withdraw before a transfer (or after as we've discussed) these withdrawals fall outside the ISA. This means if you withdraw some funds before a transfer, the receiving provider (in your case Coventry) does not know about this withdrawal. They only get told what's in the ISA when you go to transfer it.

Here's an example.
You will have £22,200 in your Natwest ISA. You will withdraw £2200 for it leaving £20,000 in the account. You submit a transfer request to Coventry who contact Natwest. Natwest has £20,000 in the ISA so they tell Coventry this amount and Coventry processes this request. Coventry never know or see the £2200 so they don't so they don’t include it in the transfer. The £2,200 you withdrew has lost its ISA status the moment it left NatWest — it’s just ordinary savings now. Coventry only ever receives the £20,000 balance that remains inside the ISA wrapper.

Hope this helps. If you're not sure how to do an ISA transfer let us know an we'll give you some guidance.

Great, thanks for clearing that up Chilli. 

I've never done an ISA transfer, isnt as simple as opening an ISA with Coventry (or actually im thinking of going with Virgins 1 year fixed ISA 4.16% now) and then contacting them and getting them to do the transfer for me?

Or is it done a different way?

Thanks

BikingBud

The key part is the compound interest effect in the tax free environment.

Last years 20K might well have accrued nearly £1200 that now gets tax free interest.

Ch1ll1Phlakes

wenger08 said:

Ch1ll1Phlakes said:

wenger08 said:

Ch1ll1Phlakes said:

wenger08 said:

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

All money in ISAs earns interest tax-free, that means all your £35000 earns interest tax-free not just the £20,000 you put in this year. The more allowance you accumulate across tax-years the more funds you have that won't be taxable as long as they stay within the ISA wrapper.

It's fine if you don't think you'll have more funds to throw into ISAs next tax-year.

In your situation at a minimum I would do an ISA transfer for the £20,000 as this keeps in within the ISA wrapper and doesn't use any of this years allowance.

Moving the £15k to cahoot is reasonable as you will have your £20k allowance left this tax-year to pay it back into ISAs if you so desire. Even if you don't do it this TY you could easily do it next TY as you said you don't expect to have more funds to add to ISAs next year.

You are correct to note there are penalties if you withdraw early from a fixed rate ISA. If you're thinking you need some accessible funds it is reasonable a do so and keep an emergency fund in an easy access account like Cahoot. Though you mention you're unlikely to withdraw in the next 12 months and if so, with interest rates gradually reducing you should note that the cahoot account is variable and the interest rate could drop in the near future.

Without trying to over complicate this for you, as you mentioned earlier you won't be near your PSA with £15k at 4.4% in cahoot so if you're looking a higher interest rate than the ISA, that's fixed you could consider 1 Year Fixed Rate Bond (i.e. non-ISA) but it's up to you.

As I said already at a minimum I think it's sensible to maintain some of your built ISA allowances (by transferring the £20k) but as you have some room to work with in this years allowance what you do with your other funds (the £15k + anything else) is entirely up to you and won't harm your ISA allowances in the long run (as you probably wouldn't have accumulated anything more than £35k in ISAs anyway.)

I hope this helps you make sense of all this. Take some time to consider it and send in further messages if you need more help or suggestions. Always happy to help and sorry these messages have been quite long but don't want to leave anything out and leave you confused by something I said.

Thanks so much for a detailed reply. Much appreciated! 

Can i transfer from 2 of my old ISA's into one new ISA? (so the £20,000 + the £15,000) Or is it only one transfer allowed from one ISA when opening a new ISA?

Thanks

As mentioned above you can transfer as many ISAs as you want into a new ISA account. So both the £20000 in #1 and £15000 in #2 could be transfer into a new one #3 (total £35000).wenger08 said:

Ocelot said:

You can transfer more than one old ISA into a new ISA, assuming their terms allow this. I once transferred three old ISAs to one provider at the same time.

Thanks

this line on the coventry building society is confusing me:

• You can also transfer in current and/or previous years’ ISA savings using an ISA transfer. If you’re transferring in your current year’s savings then you must transfer all of it, as you are only able to pay into one cash ISA with us per tax year.

Does this mean i cant withdraw my interest earned from my previous years' ISA's and i have to transfer the whole amount?

From what you've written all your ISA deposits are from previous tax-years, which means you haven't used your current year allowance. Coventry's language here causes a little confusion so here's it tweaked for clarity.

• You can also transfer in current and/or previous years’ ISA savings using an ISA transfer. If you’re transferring in your current year’s subscriptions then you must transfer all of it, as you are only able to pay into one cash ISA with us per tax year.

You are not transferring current year subscriptions so you don't have to worry about this. You can withdraw your interest.

Here's some more detail if you want to understand this better.
Furthermore, if you withdraw before a transfer (or after as we've discussed) these withdrawals fall outside the ISA. This means if you withdraw some funds before a transfer, the receiving provider (in your case Coventry) does not know about this withdrawal. They only get told what's in the ISA when you go to transfer it.

Here's an example.
You will have £22,200 in your Natwest ISA. You will withdraw £2200 for it leaving £20,000 in the account. You submit a transfer request to Coventry who contact Natwest. Natwest has £20,000 in the ISA so they tell Coventry this amount and Coventry processes this request. Coventry never know or see the £2200 so they don't so they don’t include it in the transfer. The £2,200 you withdrew has lost its ISA status the moment it left NatWest — it’s just ordinary savings now. Coventry only ever receives the £20,000 balance that remains inside the ISA wrapper.

Hope this helps. If you're not sure how to do an ISA transfer let us know an we'll give you some guidance.

Great, thanks for clearing that up Chilli. 

I've never done an ISA transfer, isnt as simple as opening an ISA with Coventry (or actually im thinking of going with Virgins 1 year fixed ISA 4.16% now) and then contacting them and getting them to do the transfer for me?

Or is it done a different way?

Thanks

Yes you open the new ISA and submit an ISA transfer form with you NEW provider. They will do all the hard work.

Every provider can be slightly different so just make sure you know what the provider you are using requires. Some use paper forms, some digital. Some require those forms to be submitted when opening the account while others give you a period (around 15-30 days) to transfer in.