Full ISA Guide Discussion Area

Sarah_Bellum

I had an ISA last year and put in the full amount. This year I have now opened a new one as it had a better rate and have deposited the full amount allowed. However I still have funds in the old ISA although I am no longer depositing into it. Is this allowed or should I have closed it? If so where do I put the funds? I cant put them into the new ISA as I have already put the full amount in.
Sarah

Crabman

Hi Sarah - you're allowed to deposit up to £3600 each year (last year it was £3000) so last year's ISA is fine to stay where it is, you don't need to do anything.

Of course if you wanted to transfer last year's ISA to a better interest rate account (see Martin's ISA Transfer article) you could do that & it would have no effect whatsoever on this year's allowance.

globalnomad

Hi. I've read up on ISAs and fully see the benefits of opening one (in fact, I opened my first one in April of this year after reading Martin's guide). I'm now trying to get my boyfriend to do the same.

What I don't understand is WHEN is the best time to open an ISA? Is it nearer the beginning of the financial year (thereby, I presume, benefitting most from the tax savings on interest paid) or nearer the end, when perhaps better ISA deals are out there as banks try to attract your interest (pardon the unintended pun!)?

Any advice much appreciated!

Crabman

Hi globalnomad, welcome to MSE

If you'll be paying tax on the money it's better to put it in the ISA sooner (provided you won't need to withdraw it straight away). Any benefit from waiting for a slightly better interest rate will most likely be cancelled out by the tax-free interest lost while waiting.

You can always transfer to a better paying ISA account when the opportunity arises (see transfers article).

BigRichG

This morning I was doing an online money transfer of £1750 from my current account to my ISA (same bank) but stupidly I accidentally transferred the funds the wrong way and took them out of my ISA and into my current account. I transferred the money straight back into the ISA, but of course I have now lost £1750 of my annual allowance, due to the withdrawal. I spoke to various Phonebank reps, but I don't think they were used to dealing with that sort of issue and couldn't help. The money was only out of my ISA for about 2 mins before it went back in.

Has anyone else done something similar or know how I could go about getting the allowance reinstated?

Thanks

vaderag

Just about to apply for an HSBC cash ISA, and will be dumping the full £3600 into it immediately.
Just got to the application form and there is the question:

Pay my interest to my Cash e-ISA ? Yes / No

No, am I right that in this instance I want to click No, since i'll already be at the threshold? Or will the interest allow me to go over the threshold?

Thanks

RayWolfe

Interest is NOT part of your allowance ... so best to tick YES.

vaderag

RayWolfe wrote: »

Interest is NOT part of your allowance ... so best to tick YES.

So you mean I can be earning the higher rate on the interest also if i do that?

RayWolfe

You sure can!
That's one of the benefits of Cash ISAs, they can grow and grow by getting interest on your interest ... and a further £3,600 allowance to add each year.

vaderag

Awesome - thanks for the help!