Transfer Cash ISAs Discussion Area

littlefurrymonkey

littlefurrymonkey wrote: »

Hi
Not sure if this has been posted before (my first ever post to MSE). My current ISA rate is appaling and I want to transfer this money to a better rate with a different provider.

I also want to open A&L's new ISA deal so I can take advantage of their super interest rate at the moment? I know I can't transfer existing funds into this ISA.

Can I do both - open A&L's and do a transfer to another provider - and stay within the rules? Or can I only do one each year? And if I can only do one each year, does that mean I can only invest into one of them next year? Hmm, questions, questions!! All help gratefully received!
Thanks

I have paid into my current ISA and have about £100 of my allowance left for this year. Can I open the A&L ISA still with the £100? And because I've added funds my exisiting Cash ISA can I still transfer it or does it have to be dormant?

littlefurrymonkey

littlefurrymonkey wrote: »

I have paid into my current ISA and have about £100 of my allowance left for this year. Can I open the A&L ISA still with the £100? And because I've added funds my exisiting Cash ISA can I still transfer it or does it have to be dormant?

Just phoned the Revenue & Customs ISA Helpline on
0845 604 1701 . They have informed me I cannot open a new ISA as I have already paid funds into my existing ISA this year Bye bye A&L ISA - hope it's still around in April!

I apparently can't transfer my existing ISA to another provider because I have put funds into it this year. So will have to wait until 6th April 2010 to transfer.

How very annoying.

Baldur

littlefurrymonkey wrote: »

I apparently can't transfer my existing ISA to another provider because I have put funds into it this year. So will have to wait until 6th April 2010 to transfer.

That is incorrect, ISAs can be transferred at any time - the fact that you have subscribed to it in the current tax year is irrelevant.

littlefurrymonkey

Baldur wrote: »

That is incorrect, ISAs can be transferred at any time - the fact that you have subscribed to it in the current tax year is irrelevant.

That's interesting! Why did they tell me differently at HMRC??

Now, is it worth waiting for new deals in the new tax year or do I go for an exisiting offer?! Hmmmm. Am I allowed to transfer to a better deal twice in one tax year? I know there may be a penalty involved so I'd weigh-up the cost/benefits.

10_66

littlefurrymonkey wrote: »

...Am I allowed to transfer to a better deal twice in one tax year? I know there may be a penalty involved so I'd weigh-up the cost/benefits.

You can transfer as many times as you like, though as you have said, you'd have to weigh up the cost of lost interest incurred during the transfers, because the more often you transfer, the more interest you'd lose.

Lokolo

And not all ISAs allow transfers.

PosterBoy77

Not all ISAs allow transfers in, but they all have to allow transfers out.

MarkyMarkD

You can do both.

KingL

You'll will probably want to pay your remaining £100 into your current ISA before you transfer it - that way you use all of your allowance.

(It will probably be into next tax year before the one you are transferring into is ready to accept payments, so you won't be able to pay this year's £100 into it at that point in time).

jamesd

littlefurrymonkey wrote: »

Just phoned the Revenue & Customs ISA Helpline on 0845 604 1701 . They have informed me I cannot open a new ISA as I have already paid funds into my existing ISA this year Bye bye A&L ISA - hope it's still around in April!

I apparently can't transfer my existing ISA to another provider because I have put funds into it this year. So will have to wait until 6th April 2010 to transfer.

They just gave you the easy "can't" answer rather than telling you how you can do it within the rules.

If you want to use the A&L 3.5% account you have two approaches available:

1. Transfer the current year money to a S&S ISA and optionally withdraw it from the S&S ISA as soon as it arrives. This transfer resets the current year cash counter and treats the money as if it had been originally paid into the S&S ISA. With no cash ISA allowance used for this year now you can pay the current year cash ISA allowance into a cash ISA that only accepts new money. You still need to ensure that the total of cash and S&S ISA payments doesn't exceed the annual limit, so you can't get full benefit from this if you already made S&S ISA contributions this tax year.

2. Transfer any past years money to another cash ISA. Wait until that completes! Withdraw the current year money from the existing cash ISA and leave the account with zero balance. Must be zero to comply with HMRC rules, leave NO money in the old account, ask to close it so you get all final interest withdrawn. You can then deposit this year's money into the cash ISA that accepts new money only. You're only permitted to do this withdraw to zero balance and redeposit once a tax year.

Method 1 is the best one to use. When HMRC's helpline is asked about it they happily say it's fine. The second one is really intended for doing it by mistake.