ISA Confused

mgm40

Hi,
Can anybody clarify t&c's of investing in ISA's?
I currently pay £75.00 per month into a Nationwide Instant Access ISA and have done for about 5 years now. Current ISA value is approx £5600.
I also pay £75.00 a month into a Stocks & Shares ISA managed by Insight Investment. This has also run for about 5 years and has a current value of £8000.
I have a lump sum of around £3500 to invest and was looking at opening a new fixed rate/fixed term cash ISA.
Can I keep the two current ISA's running or will I need to cancel the monthly payments into these.
Also would I be wise in moving funds from the current ISA providers into a new fund?
I also anticipate having around £500 a month to invest and was thinking of putting this into a Kaupthing Edge savings account.
Any help and advice would be greatly appreciated.

debbie42

For the current tax year (apr 7th), you have a max allowance of £3600 cash. If you have already paid the £75 into the Nationwide then you have started using this year's allowance. You can, however, opt to transfer it to another provider, if the interest is better. You'd still have £3525 left (in total) for the rest of the tax year. If you haven't already paid it then you have the full amount left and can open a new one altogether.

Hungerdunger

But the one thing you cannot do is pay into two separate ISAs in any one tax year (unless, as Debbie42 suggests, you transfer what you have already paid into a new ISA, and then continue to pay into that new ISA.)

Mikeyorks

mgm40 wrote: »

I have a lump sum of around £3500 to invest and was looking at opening a new fixed rate/fixed term cash ISA.
Can I keep the two current ISA's running or will I need to cancel the monthly payments into these.

The total of what you're proposing into ISAs (£3500 lump + £1800 via monthly = £5300) is well short of your annual allowance (£7200) ... so no problem there.

But the component parts are a problem. If you want to open a fixed rate cash ISA with your £3500 .... then that becomes your cash ISA for the year - and you can't contribute to any other cash ISA. So you have to cease the £75 monthly .... and then consider adding that to your SS ISA and contributing £150 monthly?

All of which works in terms of the overall allowance. Where you have a problem is if a £75 has already gone into your cash ISA since 6th April (or is imminent and you can't stop it)?

In which case you can reconsider the fixed ISA and continue to contribute monthly (perhaps splitting the £3500 between cash ISA and SS ISA?) ... perhaps transferring to a better rate. Or, from this year, you have a further option. Which is to transfer the £75 from your cash ISA to your SS ISA (the SS ISA provider has to do that). The result of doing that is ... it is considered you never made the £75 payment to your cash ISA. So you can then go ahead and open the fixed rate ISA .... and you will not be considered to have contributed to 2 cash ISAs!