Taking money out of my ISA and transferring it

jostar37_2

Hi guys, just a quick question I was wondering someone has the time to answer.

I want to transfer £8500 from my current ISA to a higher rate one, pretty straight forward it seems but i don't understand why I just can't withdraw £3000 from it and put it into a new ISA as "new money" - one which doesn't accept transfers?

My current ISA has been open for 3 years, and each year I have put in £3000. STupidly, I have already put in £2500 this financial year before the rate of 5.05%(!), leaving me with only £500 allowance left this year. What I plan to do is put the whole lot into abbey's ISA of 6.25% and then add the extra £500 to this, and then open alliance and leicesters 10% ISA and start putting money into that one after the 5th april.

I ask the question about withdrawing money because I know that I will need a new car within the next few months and will need my ISA funds to pay for it.

I only discovered this website a couple of days ago and I was wondering if someone with alot more experience than me can advise me on whether this seems like a good idea.

Thanks
Jo

jem16

If you are planning on using all the funds from the ISA soon it probably doesn't make any difference.

However normally you should never withdraw the money and put it in another ISA as you are using up your whole allowance by doing so whereas you would still have your allowance by transferring.

By the way it's £3600 from April 6th and not £3000.

Mikeyorks

jostar37 wrote: »

I want to transfer £8500 from my current ISA to a higher rate one, pretty straight forward it seems but i don't understand why I just can't withdraw £3000 from it and put it into a new ISA as "new money" - one which doesn't accept transfers?

Because a fundamental rule is that you're only allowed to contribute to one ISA in a financial year. And it sounds (unless you propose to do the withdrawal and fund the new ISA in the new year) as though you're intent on breaching that?

On the general theme - you can transfer in to the Abbey 6.25% .... but you've run out of time to do that and then add £500 into it prior 5th April. So add the £500 to the existing ISA and then get the transfer under way?

jem16

I was assuming OP meant after April 6th but possibly that was not what was meant.

If OP meant now then as Mikeyorks says you cannot do it.