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Full ISA Guide Discussion Area

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  • Lokolo
    Lokolo Posts: 20,861 Forumite
    Part of the Furniture 10,000 Posts
    Yes you can.

    Remember - to transfer ISAs you must fill in an ISA transfer form with the new provider.
  • Thank you! and very quick too!
  • A new low for cash ISA rates? Smile Bank are paying 1.00% if you do not have a current account with them , 1.75% if you do.
    "When the Government borrows, the citizen has to save".

    Machiavellii
  • wary
    wary Posts: 791 Forumite
    Part of the Furniture 500 Posts
    Sorry if these questions have been asked before or sound dumb, but I'm unfamiliar with ISAs, although I have read the guide.

    I have £3600 in a 6-month-fixed cash ISA that is about to expire. I intend to transfer it to an e-ISA with the same company.

    Questions are:
    1) Generally speaking, is it actually allowable to pay more than £3600 pa into a cash ISA? If so, presumably the surplus would earn interest but be taxable?
    2) When the money is transferred to the e-ISA, what will happen to the interest accrued? Would I be forced to pay this XS into a different account to avoid exceeding the £3600 limit? If they can xfer the interest into the e-ISA too, how will this work in terms of earning non-taxable interest? Does the fact that the XS is interest-earned make any difference?
    3) A general question about ISAs. Once the new tax year commences, can I leave the £3600 (plus any interest) from the previous tax year in and pay another £3600, all earning non-taxable interest? Or does carrying £3600 across from the previous year effectively count as the new year's allowance?
  • Baldur
    Baldur Posts: 6,565 Forumite
    wary wrote: »
    1) Generally speaking, is it actually allowable to pay more than £3600 pa into a cash ISA? If so, presumably the surplus would earn interest but be taxable?
    No, not in a single tax year, if you are talking about new money - any surplus would be rejected by the ISA manager.
    2) When the money is transferred to the e-ISA, what will happen to the interest accrued?
    The whole point of a Cash ISA is that any interest earned within the ISA wrapper is, and remains, tax free. The interest will be transferred to the e-ISA and is irrelevant as far as the annual £3,600 limit is concerned.
    3) A general question about ISAs. Once the new tax year commences, can I leave the £3600 (plus any interest) from the previous tax year in and pay another £3600, all earning non-taxable interest?
    Yes - you could also transfer it to a different ISA manager, if the rate offered by the current one becomes uncompetitive.
  • wary
    wary Posts: 791 Forumite
    Part of the Furniture 500 Posts
    Thanks Baldur. I understand ISAs that bit better now.
  • It says in the Guide:

    You can only have a Cash ISA with one provider in any tax year – you can't split it.

    I've just opened a fixed rate cash ISA with the Halifax, transferring an existing (opened this tax year) variable rate ISA from Alliance and Leicester to which I have already added some "new" money but not my full allowance. I assumed, in the light of the above statement, that I would have to transfer the A&L ISA in its entirety, but was told I could transfer all or part. I opted to keep some cash in the A&L for easy access.

    Was I told right?
  • Lokolo
    Lokolo Posts: 20,861 Forumite
    Part of the Furniture 10,000 Posts
    You cannot split ISA money that has been put in this years ISA.

    i.e. you can't split your A&L money. Which you have done.

    No idea what that means though.
  • Thanks for the quick reply, Lokolo!

    My A&L ISA includes money from past years' ISAs, i.e. not just the "new" money.
    Does this make it OK to split?
    The transfer is still in progress, so I don't know what will happen...
  • Baldur
    Baldur Posts: 6,565 Forumite
    Thanks for the quick reply, Lokolo!

    My A&L ISA includes money from past years' ISAs, i.e. not just the "new" money.
    Does this make it OK to split?
    The transfer is still in progress, so I don't know what will happen...
    As long as he amount transferred includes all of the current tax year's contributions up to the date of transfer, there's no problem.

    You can only make partial transfers (in your terminology 'split') of previous tax years' Cash ISA funds.
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