Who's good with ISA's?

[Zimily]

I need help for a simple question, I've just baffled myself with my cash ISA.

 

I want a new one, however, I understand it's the new tax year now. Can I move money out of my ISA I already hold, close it and then apply for a new one, or is that not allowed? Because you're only allowed one ISA per year.

 

If it's the later - oooops!

[andyofborg]

yes

 

...........

[Classic Rock]

There's no point in taking your money out. Just add to the ISA you already have. If you have found another ISA with a better interest rate then get a form from the provider of the new account and they will move the funds for you.

 

If you take out the money and put it into another account yourself then you limit how much you're able to invest in the current tax year as you only have a £3600 allowance for a cash ISA that you can invest each year tax free.

 

In a nutshell, try not to touch the money you've put in yourself. There's little point in having several ISAs dotted all over the place, just invest in the best rate one you can find. You may lose a month's interest by switching, but think of the tax you could pay or lose out on if you do the switch yourself.

[Zimily]

Sorry, my head is all confused. I can transfer from one ISA to another? If so that's very good news, but I've missed the tax year, will that not matter?

[Kingmaker2]

There's no point in taking your money out. Just add to the ISA you already have. If you have found another ISA with a better interest rate then get a form from the provider of the new account and they will move the funds for you.

 

Yes I was of the same opinion, and couldn't quite see why Zimily wanted to reopen a new ISA unless of course what they wanted to do was to transfer the funds into a brand new ISA from a new provider that offered a better interest rate.

[Kingmaker2]

Sorry, my head is all confused. I can transfer from one ISA to another? If so that's very good news, but I've missed the tax year, will that not matter?

 

No you will start a new tax year.

 

As I understand it you can close your ISA and then open another one for this tax year.

[Classic Rock]

You can transfer an ISA any time you want to. The only thing a tax year stands for is how much you can invest each tax year. You can invest £3600 today in an ISA, but if you transfer it in 6 months time to another bank, you still won't be able to add anything more to it as you've hit your limit in that year and they'll know.

 

If you hit your limit, you can look at other options such as Share ISAs but I'm out of my depth there....there are more rules than I care to think about with them.

[Zimily]

Yes I was of the same opinion, and couldn't quite see why Zimily wanted to reopen a new ISA unless of course what they wanted to do was to transfer the funds into a brand new ISA from a new provider that offered a better interest rate.

 

Yes, my ISA is earning pennies every month and there's much better ones with better rates

[Zimily]

You can transfer an ISA any time you want to. The only thing a tax year stands for is how much you can invest each tax year. You can invest £3600 today in an ISA, but if you transfer it in 6 months time to another bank, you still won't be able to add anything more to it as you've hit your limit in that year and they'll know.

 

If you hit your limit, you can look at other options such as Share ISAs but I'm out of my depth there....there are more rules than I care to think about with them.

 

Thanks for your help. I have over that amount but as mentioned above, I'm earning pennies every month so will make sense to move £3600 and do something else with the rest as will earn more money!

[Zimily]

Oh I'm reading the limit has increased to £5100 this tax year...