Cash Isa Advice Please

[daisya]

When a fixed term cash ISA matures say in the new tax year, can you split it to open two new ISA's or do you have to either transfer the whole into another ISA (paying better rates) or withdraw the whole lot to invest in other things? Thanks in advance for your help.

[smurfchops]

I think you can only have one ISA a year in your name but not sure about this. The maximum for this 5th April 2013 is I think £5,760, so maybe you can put half in one ISA and half in another, but why would you want to do this? I would just find the best cash rate for another year and transfer it. If you want to transfer the whole amount at the beginning of the new ISA year, don't take the money out and put it in your bank, it has to be transferred from your original IsA provider to the new ISA provider - otherwise you will lose all the interest you have made over the years. You can withdraw the whole lot to invest in other things, and take all your interest out as well, but if its to go in another ISA, as I say above, the original ISA provider has to transfer it. Hope this makes sense! Phone your ISA provider for more information as I'm not sure about splitting the ISA.

[smurfchops]

Sorry didn't make myself clear daisy. If you take out all your ISA savings and put them in the bank, then try to transfer the whole amount plus this year's amount, into a new ISA you wouldn't be allowed, as they will only accept this year's amount.

[daisya]

Thanks smurf I will have to ask them but just wanted to know what others thought. Yes I realise you can't withdraw them and then open another account but always good to be reminded when dealing with such things.

[emeritus]

When your ISA matures find another provider or providers who accept transfers and open new Isa`s with a split of the transfer moneys e.g. 50/50. You can only put more money i.e Additional money into one ISA in any one Tax year though you cant split this between providers.

The splitting of previous years money is allowed under ISA rules providing the money isnt from an old TESSA where the rules differ.

Do not withdraw your money and then transfer or it will lose its Non Taxable status your existing provider and your new provider/s will arrange this.

Hope this helps

[daisya]

Emeritus....does one have to stick to the tax year limit when splitting the ISA or can you put more than the limit do you know please? Say one has £20k or more in the ISA can £10k be transferred to each new account? Thanks for your help.

[emeritus]

No the limit relates to New Money in any Tax Year not previous years money

In the example you give you can open 2 new Isas and transfer £10000 of previous Tax years money to each ISA.

If in addition you wanted to invest further up to the Allowance of £5,640 ? you would only be able to do so in 1 of the new ISAS. You cant contribute to any more than one in any given Tax year.

It can be complicated, I will post a Link for you that may help but your Current and new providers will advise you when you decide what you want to do.

[emeritus]

This is written in Fairly simple terms - Hope it helps

http://www.moneysavingexpert.com/savings/cash-isa-transfers

[daisya]

Thanks emeritus will have a good look round and see what I can come up with, blooming rates as so low now that you really have to shop around.

Thanks smurf for your help too.

[Sipowicz]

You can't open two new ISAs, you can only open one ISA per year.

[emeritus]

Sipowicz you can open more than one ISA providing "New Money" is not being used. Transferred money can be used to open more than one ISA in a TAax Year.

Extract from Guidelines

There are no restrictions on the number of ISA transfers you can make over the course of a tax year. So you can choose to transfer money from several old Cash ISAs to a number of different new Cash ISA accounts, as long as you don’t deposit any new cash, and all the accounts accept transfers.