Transferring some of existing ISA

Debsmanchester · 18 January 2020 at 8:23PM

Hi All, I don't feel I'm really getting the rules around ISAs and hope you can help! I opened an ISA a few years ago with my bank (Lloyds) which is paying a very low rate of interest (0.2%).. What I want to do is transfer part of it to a new fixed-rate cash ISA (maybe 3 years) thereby getting a better rate of interest. I don't want to lock all my savings away for 3 years so my questions are: would I have to leave the rest of it in the current Lloyds ISA until April then transfer that to a better rate instant access ISA? Which ISA could I add new savings to in this financial year as I don't think I can add to both? Can I choose? If I open a new one in April can I only add to that one or can I choose which I want to add savings to? Hope this makes sense. Thanks for any help.

eskbanker · 18 January 2020 at 8:39PM

Current year contributions must be kept together but you can do what you like with money contributed in previous tax years, as long as you use the receiving provider's ISA transfer process (if changing provider).

On the other hand, any new money can only be paid into one cash ISA (and/or one of each of the other ISA types (S&S, IFISA, Lifetime)) per tax year.

So:

Debsmanchester wrote: »

would I have to leave the rest of it in the current Lloyds ISA until April then transfer that to a better rate instant access ISA?

No.

Debsmanchester wrote: »

Which ISA could I add new savings to in this financial year as I don't think I can add to both? Can I choose?

Yes, if you haven't paid any new money in to any cash ISA so far this tax year.

Debsmanchester wrote: »

If I open a new one in April can I only add to that one or can I choose which I want to add savings to?

As soon as you pay any new money into a cash ISA in the new tax year, that precludes you from paying new money into any other cash ISA, but transfers don't affect this.

Debsmanchester · 18 January 2020 at 9:02PM

Thank you Eskbanker, that's making it a bit clearer. I have paid money into my current Lloyds ISA this financial year but I was going to transfer more than I have paid in to a fixed rate cash isa. So transferring, in essence, everything I have paid in the past year plus a bit more. The balance is money I have paid in over the previous 5 financial years. I wanted to put that in an instant access isa just in case I need it. So it sounds like I can transfer to a fixed rate isa and open a new one for the balance in this financial year? I assume they don't count transferring as opening a new account as I know you can only open one a year.

eskbanker · 19 January 2020 at 1:23AM

Debsmanchester wrote: »

I have paid money into my current Lloyds ISA this financial year but I was going to transfer more than I have paid in to a fixed rate cash isa. So transferring, in essence, everything I have paid in the past year plus a bit more. The balance is money I have paid in over the previous 5 financial years. I wanted to put that in an instant access isa just in case I need it. So it sounds like I can transfer to a fixed rate isa and open a new one for the balance in this financial year?

No, if you've paid into a cash ISA this tax year then for the rest of the tax year you can only pay new money into that same one or one into which you transfer that current year money, not a third one, because all current year contributions need to be kept together in the same ISA.

Transferring some of existing ISA

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free