Quick ISA Question

Lighters

I opened an ISA account with HSBC as thats where my current account was at
At the time the max capacity was 3k but i think it has now gone to around 3600?

I dont fully understand how ISA's work in regards to if i want to take the cash out. If i withdraw 500 from the current 3000 leaving £2500 - Does that mean i cant add anymore cash to the ISA account until the next tax year?

Also how does switching isa's work because if i;m not touching the money i could really use the better interest!

Baldur

Did you open the HSBC ISA before 5th April 2008? The Cash ISA allowance went up from £3k to £3.6k on April 6th (i.e. the current tax year). If it was prior to April 5th, your ISA is for the 2007-8 tax year and you now have a new allowance of £3,600 for 2008-9.

Any funds removed from a Cash ISA cannot be replaced, once you have paid in your maximum annual allowance that's it. You then have to wait until your new allowance for the next tax year.

For transferring your Cash ISA, you need to apply to your chosen new ISA manager, complete their transfer form and let them contact the old manager (HSBC in your case) to arrange for the transfer of funds.

nrsql

Consider it a new ISA each tax year. Sounds like you opened one last year (befre Aptil 5th). If so you can now open another one and deposit up to £3,600 in this tax year.
You are only allowed to contribute to one cash ISA in a tax year.
The limit is calculated on amounts deposited and ignores withdrawals - you can deposit £3,600 in a year, doesn't matter if you withdraw sums you still can't put it back.

To switch contact the provider you want to switch to and they will handle everything - probably just fill in a form. Do not withdraw the money and try to open a new ISA - you'll have lost the ISA protection.

Lighters

Yes it was before the date you said

So if i take anymoney out i cant deposit any money until next year

Also, if i change my ISA i cant deposit any money either as i ahve already deposited money this year

Baldur

Lighters wrote: »

Yes it was before the date you said

So if i take anymoney out i cant deposit any money until next year

Also, if i change my ISA i cant deposit any money either as i ahve already deposited money this year

If you haven't deposited any money since April 6th, it already is 'next year' that's the date on which the tax year begins - so you have this year's allowance of £3,600 to deposit wherever you like.

If you withdraw any money from a Cash ISA, it loses its tax benefit & cannot be replaced.

If you transfer your HSBC ISA you can add this year's allowance or pay it into a totally different provider.

See HERE for an explanaton of how Cash ISAs work.