Full ISA Guide Discussion Area

amy0603

Despite trawling through this site and the forum, I'm still confused about my own ISA situation.
I have around £15,000 in a cash ISA through NS&I which I had not added to in the 09/10 financial year. I opened another cash ISA with Alliance and Leicester in March 09 to make use of the remaining couple of weeks of 09/10 and planned to use this mainly for 10/11 financial year as it has a good interest rate. I wasn't planning on moving the money out of my NS&I ISA as it's quite a big lump that I am saving for a specific purpose but wanted another ISA with easier access and no long-term plan as I am saving for something else in the near future.

Am I legally allowed two ISAs as long as I only lodge into one during one tax year?

Also, is it now too late to transfer the money from the old ISA to the new one? Does it have to be done at the time of opening the account?

If I can't have two ISAs, whats my best plan of action bearing in mind the new one's only been open about 2 weeks?

amy0603

sorry i mean I opened the new ISA in March 10

RayWolfe

amy0603 wrote: »

Am I legally allowed two ISAs as long as I only lodge into one during one tax year?

Correct. You can have as many or as few as you wish ... but you can only subscribe to one in any tax year unless you transfer it to another provider. That is taken as the one for the current year.

ian74_2

Hi
Can I join the ISA confusion?

Spiggle says 'Whatever you decide to do DO NOT WITHDRAW THE MONEY - ONLY EVER TRANSFER THROUGH THE INTERBANK SYSTEM or you will lose the 'tax wrapper' benefit on the money.'
So, if you want the money back you've got in an ISA to spend (not that I'm planning to), how should you do that? Do you lose the tax wrapper benefit just for the current year, or pro-rata you've held the money in that account?

Also, in Martin's latest email he says 'Can I still add money to last year's? No. Try and put more in & it counts as opening this year's ISA with that provider.' I opened an A&L Flexible ISA in March 2010. If I want to invest this year's money, have I got to put it in another ISA, as the current A&L Flexible ISA isn't quite so good (i.e. if I add money do I override my 'better rate' or would A&L open another ISA account?)
Thanks

samoore

Hi, I trawled through a number of pages of this forum but couldn't really see if someone else had the same question.

I am looking to open a new Cash ISA this year and won't be transferring from my existing Cash ISA because of the T's and C's.

Can I still withdraw money from the previous ISA without it being classed as re-opening that ISA? I know you can only open one in a year, and by adding cash to an existing Cash ISA that would effectively be "opening" it again. I don't want to do this, only to withdraw. It has all my savings in it and if something should go wrong I'd need to be able to access that cash. I know it's not ideal and I'll endeavour not to. It has a dreadful interest rate btw so I wouldn't be losing much.

blueberrypie

ian74 wrote: »

Spiggle says 'Whatever you decide to do DO NOT WITHDRAW THE MONEY - ONLY EVER TRANSFER THROUGH THE INTERBANK SYSTEM or you will lose the 'tax wrapper' benefit on the money.'
So, if you want the money back you've got in an ISA to spend (not that I'm planning to), how should you do that? Do you lose the tax wrapper benefit just for the current year, or pro-rata you've held the money in that account?

You don't lose any tax wrapper up to that date. You cannot re-deposit it without using up some of your current year's allowance, however. If you're withdrawing it to spend, it doesn't matter.

Also, in Martin's latest email he says 'Can I still add money to last year's? No. Try and put more in & it counts as opening this year's ISA with that provider.' I opened an A&L Flexible ISA in March 2010. If I want to invest this year's money, have I got to put it in another ISA, as the current A&L Flexible ISA isn't quite so good (i.e. if I add money do I override my 'better rate' or would A&L open another ISA account?)
Thanks

A&L's terms allow you to put your 10/11 allowance into the same ISA. There has been some discussion about whether it would be at the 3.5% rate or at 3.2%, but the A&L website now shows a maximum balance of £10,200 for the higher rate of interest - and it is the *only* rate shown for accounts with the account numbers issued when they were offering 3.5%.

blueberrypie

samoore wrote: »

I am looking to open a new Cash ISA this year and won't be transferring from my existing Cash ISA because of the T's and C's.

Can I still withdraw money from the previous ISA without it being classed as re-opening that ISA? I know you can only open one in a year, and by adding cash to an existing Cash ISA that would effectively be "opening" it again. I don't want to do this, only to withdraw. It has all my savings in it and if something should go wrong I'd need to be able to access that cash. I know it's not ideal and I'll endeavour not to. It has a dreadful interest rate btw so I wouldn't be losing much.

Stop thinking about "opening" and "closing" ISAs - it's not relevant and it only confuses the matter. The rule is that you can only *subscribe* to one cash ISA each tax year. To "subscribe" means putting new money in - that is, money that isn't being transferred from another ISA.

So can you withdraw money from your previous year's ISA? Yes. It has no effect on your tax liability. It might affect the interest you earn - that depends on the terms and conditions of your ISA. Some ISAs don't allow withdrawals - if you want to take money out, you have to close the ISA completely.

You are correct that adding funds to a previous year's ISA counts as "subscribing" to that ISA for the current tax year. If you do that, you can't put new money into any other ISA in the current tax year (unless you transfer, but that's more complicated and isn't relevant to your questions).

Spiggle

ian74 wrote: »

Hi
Can I join the ISA confusion?

Spiggle says 'Whatever you decide to do DO NOT WITHDRAW THE MONEY - ONLY EVER TRANSFER THROUGH THE INTERBANK SYSTEM or you will lose the 'tax wrapper' benefit on the money.'
So, if you want the money back you've got in an ISA to spend (not that I'm planning to), how should you do that? Do you lose the tax wrapper benefit just for the current year, or pro-rata you've held the money in that account?

Sorry if I caused you confusion Ian, my answer that you quoted was specifically related to having 'old' ISA balances and transferring them and didn't relate to if you wanted to withdraw the money and spend it. Blueberrypie has answered you very accurately, clearly and succinctly.

Spigs

samoore

Thanks, replacing "opening" with "subscribing" does make it all far clearer.

As far as t's and c's for interest and withdrawing money from existing ISA is concerned, I am all up to speed on that one.

You've made it all clear, thank you!

rixius

A quick question:

I maxed out the A&L ISA last year (£3,600).
SO, can I simply pay into the same account up to the new allowance this year (making £8,700)? And all this remains tax free?
Am I correct in thinking that any monies I pay in now will be subject to the 3.2% interest rate?