Cooling off period and other ISA accounts

Sahara20

I opened a cash ISA in this tax year. After reading this forum I decided to close it during the 14 day cancellation period.

The money was sent to my linked account (regular bank account). That was the option Investec offered. I then opened an ISA with a different bank. I wanted to check if that is all ok. I.e I can still use the full £20K allowance this tax year. My linked account hasn't messed it up?

Investec website says

You can close or transfer out your Fixed Rate Cash ISA within 14 calendar days of opening it without paying any fees. Your full balance, including any interest earned, will be returned to your linked account, and it won't count toward your ISA allowance.

masonic

Yes, if they've not provided any specific instructions for exercising those cancellation rights there should be no issue. From that quote it looks like they treat all closures within 14 days as cancellations.

flaneurs_lobster

Think your £20k allowance is intact. The interest that was returned from Investec will be taxable 'tho.

Sahara20

Thanks. The robot chat was somewhat vague. I understood as I closed the ISA account during 14 day cancellation period it is null and void and I was free to assign the full £20k elsewhere.

I.e it is OK to exit the ISA wrapper as it is not classified as used (within 14 day cancellation period).

Sahara20

My question arose because I read that Investec pays the interest to the linked account after the 1 year fix ends. At that point the money (interest) moved out of the wrapper loses all protection. I.e it is not within the 14 day cancellation period.

So different to my case of within the 14 day cancellation period.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81969634#Comment_81969634

No, that's incorrect. The interest is tax exempt:

https://www.gov.uk/guidance/how-to-open-an-isa-as-an-isa-manager#cancellation

Sahara20

flaneurs_lobster I thought the same re interest and that doesn't concern me but I have now found this in the long terms and conditions

The interest earned during that period will be tax free and won’t count towards your personal savings allowance.

Sahara20

Thanks for the answers. My concern was the money being transferred to my linked bank account.

masonic

I'm not sure why that would be a concern. You're not expecting that interest earned on that money would continue to be tax free after it was removed from the ISA wrapper are you? If you want that, then you'll need to put it into another ISA.

Sahara20

I put £20k in an ISA. Closed said ISA in cancellation period. £20k plus interest transferered to linked account. (Not concerned regarding interest).

20K put in new ISA.

Concern was £2OK moving out of ISA wrapper rather than being transferred directly to another ISA. But I believe the cancellation period allows it

masonic

The Investec website says (from your original post) "You can close or transfer out your Fixed Rate Cash ISA within 14 calendar days of opening it without paying any fees. Your full balance, including any interest earned, will be returned to your linked account, and it won't count toward your ISA allowance."

On what grounds are you doubting this?