More than one ISA

rjgb

Hi,

These are probably rather basic questions, but I can't find the answers in plain black-and-white. :rolleyes:

Say, you have money in an ISA (call it ISA1) into which have contributed for a couple of years to amass about £8k. The interest rate on the ISA is 5.5%.

There are several ISAs around now with higher rates, but these do not accept transfers from other ISAs. In other words, they are only for "new money".

The first question:

If I do not contribute to my existing ISA (ISA1) in a 12-month period, but leave it standing gathering interest on its existing credit, can I set up and pay-into one of the "new money only" ISAs (ISA2) to take advantage of their higher rate?

In other words, is it permissible to pay into one ISA (ISA2) while having money standing in a second ISA (ISA1)?

The second question:

In the future, when/if I can find an ISA (ISA3) with a high rate of interest that accepts transfers in, can I transfer into ISA3 the cash in both ISA1 and ISA2?

Hope I've not made that too confusing...!

Thank you for your help!

RJGB

greenface

:cool: yes:cool:

isofa

As greenface says, yes!

To expand a bit, you can have as many cash ISA as you like, as long as you don't put away more than £3600 in a cash one in the tax year (up from £3000 last year).

Never close a cash ISA, instead initiate a transfer to the new one (at the new one's branch or postal/phone), from the old one, there is often quite a delay from the old one to transfer the money.

You could also open two ISAs this year, put £3600 in a new cash ISA (which for example doesn't accept transfers), and then open another (which does accept transfers) to move all the money in your other ISA across. Because you've not added more than £3600 "new" money in one tax year, this is permissible.

rjgb

Thanks very much guys. That's very helpful!

"isofa" >> why do you say "never close a cash ISA"? Once the transfer has been completed, what benefits are there in keeping the ISA "alive"?

R

isofa

Once it's transferred it'll be closed - it's of no use once it has a zero balance.

I think you misunderstand me - when I say never close it, as in: never close it and withdraw all the money, then and take to another company to deposit into a new ISA - because instantly you'll loose the tax free status, and not be able to open a new one with the balance. Only ever transfer between then, never close first and try and move the money.

rjgb

Ah, I see what you mean. Yes, I wouldn't withdraw the money and then deposit it in a new account.

Thanks again. :beer:

LongTermLurker

rjgb wrote: »

The first question:

If I do not contribute to my existing ISA (ISA1) in a 12-month period, but leave it standing gathering interest on its existing credit, can I set up and pay-into one of the "new money only" ISAs (ISA2) to take advantage of their higher rate?

Just to expand on ISOFA's comments, it's a TAX YEAR, not a 12 month period, that's important. A tax year runs from 6 April - 5 April.

WoopsiDaisy

So according to this site it says only "only one Cash ISA and one Stocks and Shares ISA is allowed per customer per tax year" (http://uk.moneto.eu/investment/savings-accounts/terms-conditions/multiple-accounts/)
So it seems that if your not going crazy with opening to many account in the same year everything should work out. Also for the current rules because I think they are changing them all the time I believe that this would be a reliable source
(http://www.find.co.uk/investments/isas/back_to_basics_guide_to_isas)
It is annoying how they changing the interest rates so quickly these days. I never know whether to wait or to just go with the current highest rate. Good luck racking up the money

Cheers :beer:

rjgb

As a further idea, is it allowed to do the following, all in the same financial year?:

Open ISA1 (5.00%) on July 1st 2008 and put £2000 into it.

Spot ISA2 with a rate of 6.25% on August 1st. Open ISA2, transfer funds from ISA1 into ISA2, and then pay in an additional £1600 to ISA2 over the remainder of the year?

Bottom line, £3600 invested over the tax year but some went into ISA1 and some went into ISA2.

Cheers
RJGB

Lokolo

Yes

Its only not allowed to h ave the 2 ISAs open and put money into both at the same time. Also you must transfer using an ISA transfer form, not by BACS or CHAPS etc.